How China’s Private Refiners Upended the Oil Market

China’s independent refiners have driven a meteoric shift in the global oil market since Beijing gave them permission to import crude in 2015, helping the nation overtake the U.S. as the world’s biggest importer and shaking up trade flows. Private processors underpinned a market recovery in 2020 after the Chinese economy rebounded from the Covid-19 pandemic, buying so much cheap oil at one stage that a traffic jam of tankers formed off the coast as they waited to unload millions of barrels.

The foundations for China’s private refining industry were laid in Shandong province during the 1960s. To ease resistance to the development of the Shengli oil field, Beijing allowed local governments to build plants to process crude that leaked from pipelines servicing the deposit. Known as teapots because they started out as small and simple refineries, the industry has evolved over the years and now includes larger and more sophisticated plants in other regions including in the provinces of Liaoning and Zhejiang.