Asian oil refiners, particularly Chinese and Japanese state-owned giants, are slashing operating rates by 20% to 30% due to the Middle East war and shipping bottlenecks through the Strait of Hormuz, according to sources. This follows a dramatic plunge in maritime traffic through the vital waterway, now down 80% after recent attacks. Major refiners like Cnooc Ltd. and China Petroleum & Chemical Corp. face vulnerability as they rely heavily on Gulf crude, unlike smaller independent 'teapot' refineries that can source from Russia or Iran.

The move comes despite healthy fuel margins, driven by fears of missing crucial Middle Eastern shipments that take 15-30 days to arrive. With only 2-3 weeks of crude on hand, processors are turning to costly alternatives from the Atlantic Basin, creating a paradox of reduced activity amid profitability. This strategic shift signals a significant disruption in Asia's oil supply chain, directly impacting regional fuel markets and refining economics.