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China Pauses Fuel Exports for October, Tightening Asia's Diesel Supply

PetroChina and Zhejiang Petrochemical suspended diesel, gasoline and jet fuel exports to protect domestic stocks. Brent crude closed above $100.

By Global Terminal Staff · · 1 min read

An oil tanker at sea
Photo: Fredrick F. / Unsplash

Why it matters

  • China is a major exporter of refined fuels to the rest of Asia.
  • Less Chinese diesel and jet fuel means tighter supply and higher prices across the region.
  • Higher fuel prices feed into inflation, which central banks are already fighting.

Two of China's largest refiners have suspended fuel exports for October to protect domestic inventories, Hydrocarbon Processing reported, citing people familiar with the matter. State-owned PetroChina and privately controlled Zhejiang Petrochemical halted exports of diesel, gasoline and jet fuel.

The refiners cited uncertainty over crude oil supply and domestic inventories that remain below their prewar levels. Shipments to Hong Kong and Macau are exempt.

How much fuel is at stake

In September, Chinese refiners loaded about 1.4 million metric tons of diesel, 500,000 tons of gasoline and at least 2 million tons of jet fuel for export, according to the report. It was not clear whether Beijing would allow exports to resume after China's Golden Week holiday ends on Oct. 7.

Beijing restricted fuel exports in March after war broke out involving Iran, relaxed the curbs in July and has since managed shipments month by month, the report said.

Prices react

Asian diesel swap spreads for October and November traded at two-week highs. Crude prices also climbed. Brent settled near $100.60 a barrel on Thursday, up 2.6%, and U.S. crude rose 2.8% to $92.96, according to TheStreet and Yahoo Finance.

Brent was about 57% higher than a year earlier, Fortune reported.

Higher fuel prices add to the inflation pressure that pushed the Federal Reserve, the European Central Bank and the Bank of Japan to raise rates in September. Our lead story explains how that played out in the bond market on Thursday.

Sources