China has halted oil product exports in October to strengthen domestic reserves. This action is in response to pressures from recent wars and disruptions in crude oil supply, and it could have serious repercussions for global fuel markets.
Details of the Export Suspension
According to informed sources, Chinese refineries have stopped exporting gasoline, diesel, and jet fuel for October due to concerns over declining domestic reserves. This decision comes at a time when China, the world's largest crude oil importer, has faced challenges in fuel supply due to wars and supply disruptions in recent months.
Beijing had restricted fuel exports in March 2023 due to the outbreak of war in the Middle East. Although these restrictions were eased in July, a green light for exports to destinations other than Hong Kong and Macau has yet to be issued with the start of the one-week holiday on October 5.
Market Forecasts and Implications
Currently, uncertainty regarding access to crude oil and declining domestic fuel reserves has led Beijing to focus on domestic supply security. Zameer Youssef, the senior director of the petroleum products division at Kepler, noted that commercial diesel and gas oil reserves are about 20 million barrels below the threshold. Gasoline reserves are also facing an approximate shortfall of 9 million barrels.
According to estimates, in September, 1.4 million tons of diesel, 500,000 tons of gasoline, and at least 2 million tons of jet fuel were loaded, showing a decrease compared to August. In this context, countries such as Singapore, Malaysia, Australia, Vietnam, Bangladesh, and the Philippines were among the main destinations for China's fuel exports in September.
Analysts believe that the halt of China's oil product exports could drive prices to unprecedented levels in some countries. Michael McClay, head of China energy research at the Oxford Institute for Energy Studies, stated that the Chinese government's focus is on domestic supply security, with international markets being a secondary priority.
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