SINGAPORE, Oct 1 — Chinese refiners have suspended exports of oil products to regions beyond Hong Kong and Macau until further notice from Beijing, four people briefed on the matter said today, in a move that will further crimp war-constrained fuel markets.
Beijing restricted fuel exports in March following the outbreak of the United States (US)-Israeli war on Iran that disrupted Middle Eastern crude supplies to the world's top importer, before relaxing those curbs between July and September.
As China looks to safeguard domestic supplies, three sources said state oil major PetroChina cancelled a handful of gasoline and jet fuel shipments planned for October yesterday. It had committed to most of these now-cancelled deals in the past two weeks.
The sources spoke with Reuters on condition of anonymity because they were not authorised to speak to the media.
Beijing has been managing export volumes every month to control fuel supplies, but China started a week-long holiday today without giving major refiners in the world's largest refining hub the green light to export fuel products to regions outside Hong Kong and Macau during October.
Global markets are grappling with the loss of supplies from war in the Middle East and Ukraine's attacks on refining infrastructure in Russia, and China's move could drive prices in some countries to new highs.
China's pause comes less than a week after President Xi Jinping’s visit to Washington, where US President Donald Trump urged him to help stabilise global fuel supplies. US Energy Secretary Chris Wright said the world has lost diesel exports from the Middle East and China, with Washington expecting announcements soon from Europe about new diesel supplies.
Trade sources noted that uncertainty over crude availability and a drop in local fuel inventories prompted Beijing to focus on supply security.
"China's priority has always been domestic energy security, thus even in the midst of visible increased crude buying, this does not necessarily translate to increased product exports," said Sparta Commodities senior analyst June Goh.
Diesel margins rise
Expectations that Chinese export supply will be absent caused Asian diesel refining margins to rebound on Thursday to their highest in a week at roughly US$76 a barrel, with the October-November price spreads trading at a two-week peak.
The fourth source told Reuters that another major refiner, privately controlled Zhejiang Petrochemical Corp (ZPC), skipped scheduling any oil product shipments during the holiday week.
PetroChina, ZPC, and the National Development and Reform Commission did not immediately respond to a Reuters request for comment amid the holiday break.
China has the world's largest refining capacity but its fuel export volumes have typically lagged behind India and South Korea among Asian processors.
The sources added that it is unclear whether Beijing will resume permitting refiners' exports after the holiday ends on October 7, and that it could depend on domestic fuel inventories and refining output.
Since July, Chinese refiners have ramped up exports after Beijing gave the green light to ease export restrictions, as Chinese customs data indicated that gasoline, diesel, and jet fuel exports in August totalled 4.58 million metric tons.
Trade estimates showed that in September, 1.4 million tons of diesel, 500,000 tons of gasoline, and at least two million tons of jet fuel, including bonded volumes to Hong Kong and Macau, were loaded.
