Sinopec, the worlds largest oil refiner, will cut its refining runs by 5% this month as a result of ongoing supply disruptions, company President Zhao Dong said on Monday. The move comes as the state-owned company requests approval from Beijing to tap state-controlled oil reserves to ease immediate supply pressures.
Zhao also said Sinopec does not intend to buy Iranian crude despite a recent 30-day sanctions waiver issued by the U.S. Treasury for oil already in transit. He pointed to unresolved questions over how payments would be handled while financial sanctions on Iran remain in force, and raised concerns about the age and condition of many of the vessels carrying that cargo.
The U.S. waiver, announced last Friday by Treasury Secretary Scott Bessent, covers crude already at sea and is intended to bring roughly 140 million barrels into global markets to alleviate supply shortages. The waiver applies specifically to shipments currently in transit.
Asked about the prospect of purchasing Iranian barrels under that waiver, Zhao said Sinopec has been weighing the risks and has "basically wont buy" the crude. He emphasized two practical obstacles: uncertainty over payment mechanisms given persistent financial sanctions, and reliability concerns tied to the older ships transporting much of the oil.
Sinopec flagged another strategic vulnerability: the potential near-closure of the Strait of Hormuz. The company sources about half of its crude requirements from the Middle East, which makes disruption in that chokepoint particularly painful for its operations. To mitigate that exposure, a senior executive said Sinopec is buying Saudi crude from Yanbu and seeking supplies from regions outside the Middle East.
To bridge shortfalls caused by these supply issues, Sinopec has pushed for authorization to draw on Chinas state oil reserves. Earlier this month, Beijing rejected a request to access 13 million tons of reserves, but the company is pursuing permission again as it grapples with near-term feedstock constraints.
The decisions underscore the operational tensions faced by a major, state-run refiner operating in a complex geopolitical and sanctions environment. Sinopecs combination of reduced runs, selective sourcing, and attempts to access strategic stocks reflects an effort to manage immediate processing capacity while avoiding elevated legal and logistical risks associated with some available crude streams.
Contextual note - Details above reflect statements and actions described by company officials and the referenced U.S. waiver. Where officials noted uncertainties, those uncertainties are reported as described.