China’s Hengli Petrochemical has reportedly cancelled recent purchases of crude oil from West Africa and the Middle East, a move that could have implications for oil exporters across Africa as the refiner grapples with U.S. sanctions and declining inventories.
According to Reuters, Hengli has scrapped deals involving at least six million barrels of crude oil, including cargoes sourced from West Africa, forcing the company to scale back refining operations as stockpiles diminish.
The cancellations come only weeks after reports emerged that the Chinese refiner had resumed purchases of crude from West Africa and the Middle East in an apparent effort to demonstrate compliance with international trading requirements and seek removal from U.S. sanctions lists.
Reuters reported that Hengli Petrochemical, one of China’s largest independent refiners, was sanctioned by the United States in April over allegations that it purchased Iranian crude, claims the company has previously denied.
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According to Reuters, the cancelled transactions include approximately two million barrels of West African crude that had already been delivered to storage facilities in eastern China.
The company also reportedly cancelled two Middle Eastern cargoes scheduled for delivery in July, each containing about two million barrels.
Reuters noted that one of the Middle Eastern shipments has already been resold, while the reasons behind the cancellations remain unclear.
Industry sources told Reuters that sudden cancellations by major refiners are relatively uncommon and could affect future commercial relationships and trading partnerships.
The report further indicated that Hengli had structured several purchases through multiple intermediaries to reduce potential sanctions-related exposure for trading partners.
The company has not publicly commented on the reported cancellations.
What This Means For Africa
West African crude producers have increasingly benefited from Asian demand as refiners seek alternative sources of supply amid shifting global energy dynamics.
China remains one of the world’s largest consumers of crude oil, making changes in buying patterns among major refiners closely watched by African producers.
For countries that rely heavily on oil exports, fluctuations in demand from Asian markets can have important implications for export revenues, investment decisions, and broader economic performance.
Reuters reported that Hengli’s refinery operations have continued to slow as the company struggles to replenish inventories with non-sanctioned crude supplies.
The company is said to have reduced utilisation rates at its refining facilities to about 50%, down from more than 80% earlier this year.
The development also highlights the extent to which geopolitical tensions and sanctions policies continue to influence global commodity markets.
For Africa’s energy exporters, the situation underscores the importance of diversifying export destinations and strengthening resilience against sudden changes in global demand patterns.
As global energy markets continue to evolve, refiners, producers, and governments alike will be monitoring whether Hengli resumes purchases of West African crude or seeks alternative supply arrangements in the months ahead.
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Image Credit: Bloomberg
