On June 2, China's National Development and Reform Commission allowed some independent refineries in Shandong to reduce production from June, with output permitted to fall to no less than 80% of last year's monthly average level. This policy change means that, against the backdrop of high crude oil costs and pressure on refining margins, some independent refineries have gained greater flexibility in adjusting production.
Previously, due to uncertainties in crude oil supply caused by the international situation, domestic refineries were required to maintain relatively high operating rates to ensure the supply of refined oil products. This led to continued pressure on refining margins for some Shandong independent refineries. The permission to reduce output may help ease losses for these companies and also reflects that domestic refined oil supply remains generally stable.