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Bullwhip effect is a serious problem in supply chain management, it brings about production disorder, inventory imbalance, business process obstruction, waste of resources and market chaos. Our processed oil supply chain is so a large complicated system that bullwhip effect of it is more serious. To deal this problem, this paper discussed China processed oil supply chain, aim at maintaining processed oil supply, analysed the strength of bullwhip effect in the chain, proved delay is the basic reason of bullwhip effect and pointed out reducing delay is the key point to weaken bullwhip effect. We used system dynamics analysis and Anylogic simulation software to get the conclusion. Finally, we put forward some effective strategies to deal with bullwhip effect in China processed oil supply chain for improving the chain's operating efficiency.