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China’s Biggest Refiner to Reduce Operations After Freight Rates Skyrocket

  • U.S. sanctions on Chinese shipowners pushed up transport costs
  • Cost to ship African oil to Asia at almost 20% of crude price
Updated on

China’s biggest refiner plans to reduce operations from next month after a surge in the cost of shipping crude eroded margins, according to people with knowledge of the matter.

Freight rates have skyrocketed since the U.S. announced sanctions on Chinese shipowners in late-September, triggering a flight from vessels owned by affected companies and a bidding war for alternative tankers. That’s driven up the cost of importing crude and is cutting into the profits made from refining.