Oil & Gas

From a business perspective, China’s refining sector experienced a modest slowdown as supply uncertainties linked to the Iran conflict affected operational decisions. Refinery throughput fell by 2.2% year-on-year to 61.67 million metric tons, equivalent to about 14.52 million barrels per day, while utilisation rates declined to 68.79%, reflecting cautious procurement strategies by refiners. Output of key petroleum products showed mixed performance: gasoline production dropped by 2.95% to 13.51 million tons, and kerosene output declined by 3.72% to 5.13 million tons, the steepest fall among major fuels. In contrast, diesel production rose by 0.88% to 17.49 million tons, indicating sustained demand from industrial and logistics sectors. These trends suggest that refiners are adjusting their product slate in response to shifting domestic demand and supply constraints.

From an economic perspective, China’s record domestic crude production reflects a strategic push to enhance energy self-sufficiency and cushion the economy from global supply shocks. Domestic crude output reached an all-time monthly high of 19.07 million tons, or approximately 4.49 million barrels per day, contributing to a 1.3% year-on-year increase in first-quarter production to 54.8 million tons. Additionally, natural gas production rose by 3% in March to 23.4 billion cubic metres, with first-quarter output totaling 68.1 bcm, supporting China’s broader energy diversification strategy. By boosting domestic energy production, China aims to stabilize fuel supply, mitigate inflationary pressures, and sustain industrial growth despite volatility in international oil markets.

From a geopolitical perspective, the slowdown in refining activity highlights the far-reaching impact of Middle East tensions on global energy markets. As one of the world’s largest oil importers, China is particularly sensitive to disruptions in crude supplies transiting through the Strait of Hormuz. The increase in domestic production demonstrates Beijing’s long-term strategy to reduce reliance on external suppliers while maintaining flexibility in its import portfolio. At the same time, China’s response reflects a broader effort to insulate its economy from geopolitical shocks and to maintain stability in global energy markets, reinforcing its role as a key player in shaping international oil and gas dynamics.