Baghdad: China's oil refinery operations have hit their lowest point since the onset of the COVID-19 pandemic, as crude imports have significantly decreased. The decline is attributed to disruptions in supply through the Strait of Hormuz and a downturn in domestic fuel demand.

According to Iraqi News Agency, China's refinery throughput fell sharply by 17.7% year-on-year, reaching just 12.47 million barrels per day (bpd) in June. This figure marks the lowest processing volume in six years, tracing back to the pandemic's early days in March 2020. The National Bureau of Statistics' data reveals that the average run rate for Chinese refineries in May was 66.3%, with total volumes processed during the month decreasing by 9.1% compared to the previous year, totaling 53.72 million tons.

These figures further declined in June, with processing slipping to 51.24 million tons, or 12.47 million bpd, and the average run rate falling below 60%. The reduced refinery operations and processing rates are linked to the lowest level of Chinese crude oil imports in a decade, as refiners increased maintenance to mitigate losses from high input prices amid weak domestic demand.

China's crude oil imports experienced a significant drop, reaching a decade-low in June, as disruptions in the Strait of Hormuz elevated oil prices and reduced the refiners' appetite for expensive crude. Official Chinese customs data released on Tuesday shows a staggering 41.3% decline in overall crude oil imports in June compared to the previous year, amounting to 29.27 million tons, or 7.12 million bpd. The June import volumes were the lowest since October 2016.

Additionally, run rates in June dropped to an estimated 57.72%, a decrease of 3.28 percentage points from May, according to data provided by China-based consultancy Oilchem. The trend of declining refining throughput is expected to persist this month, as refiners continue to idle more units for maintenance due to weak demand and restricted supply from the Middle East, as projected by GL Consulting.