Asian Refiners Weigh 30% Output Cuts as US-Israel Strikes on Iran Halt Crude Flows

Key Facts

Major Asian refiners are contemplating a drastic reduction in crude processing rates by up to 30% following a significant escalation in Middle East tensions. This move comes after U.S. and Israeli strikes on Iran over the weekend, which have effectively halted shipments and left millions of barrels of crude oil stranded near the Strait of Hormuz. The crisis has forced a reversal in strategy for many Chinese refiners, who had previously planned a major uptick in crude purchases just before the military action. Zhejiang Petrochemical Corp (ZPC) has already led the way by bringing forward maintenance to shut down a 200,000 barrel-per-day unit to manage supply constraints. Market analysts warn that these widespread disruptions to energy flows are significantly increasing the geopolitical risk premium for global benchmarks. Consequently, both Brent and WTI prices are expected to face sustained upward pressure as supply-side risks intensify across the continent.