China's Hengli Cancels African, Mideast Oil Buys, Cuts Output
Hengli Petrochemical has scrapped crude purchases from West Africa and the Middle East while reducing refinery output, sources tell Reuters.
China's Hengli Petrochemical has abandoned planned crude oil purchases from West Africa and the Middle East and is pulling back on refinery production, according to sources familiar with the matter who spoke exclusively to Reuters. The move marks a significant retreat by one of China's major independent refiners amid mounting pressure on margins and shifting trade dynamics.
The cancellations signal broader stress inside China's refining sector, where independent operators — often called teapot refineries — have struggled with weak domestic fuel demand, tight profit margins, and a surge in discounted Russian crude that has reshaped the country's import calculus. Hengli, a large privately held refiner, had previously relied on diverse supply sources across multiple regions.
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By pulling back from West African and Middle Eastern barrels, Hengli is effectively concentrating its purchasing strategy while simultaneously throttling throughput at its facilities. Such output cuts can reflect either a deliberate margin-preservation tactic or constraints imposed by weaker downstream demand for refined products inside China.
The decision, if sustained, could ripple through crude markets in both regions. West African producers such as Nigeria and Angola, as well as Middle Eastern exporters, have counted on Chinese demand as a cornerstone of their export strategies. Any sustained reduction by major Chinese buyers would add downward pressure to benchmark prices for grades sold into Asia.
Analysts will be watching whether other Chinese independents follow Hengli's lead in the coming weeks, potentially amplifying the impact on global oil trade flows. Continue reading at Reuters.
