Diesel and gasoline fuel inventories in China have significantly decreased, which could lead to export restrictions. According to recent fuel inventory data, gasoline inventory at China's state-owned energy companies fell by 2.9 percent last week, reaching its lowest level since 2022.
Diesel Inventory Drops to Lowest Level in 15 Months
Diesel inventory also decreased by 2.4 percent last week, reaching its lowest level in 15 months. This situation indicates increasing pressure on the domestic market and the possibility of export restrictions by Beijing. According to Energy Aspects analyst, Gianna Sun, given the constraints in the domestic market, there is a risk of export restrictions increasing to around 1.2 million tons in the fourth quarter of this year.
History of Export Restrictions in China
China had previously imposed restrictions on fuel producers earlier this spring when the U.S. and Israel's war against Iran raised concerns about fuel supply security in the world's largest crude oil importer. In early March, Beijing ordered energy companies to halt new fuel export contracts and to attempt to cancel previously arranged fuel shipments. This export ban was implemented immediately and included all shipments of gasoline, diesel, and jet fuel that had not passed customs.
Following this ban, gasoline and diesel inventories at state-owned refineries reached their highest levels since 2025 and 2024. A month later, China adjusted its export restrictions, and exports surged in June due to supply shortages from the Middle East, while refineries were affected by drone and missile attacks. This gradual adjustment trend continues, leading to significant growth in exports, especially in oil fuels.
If China now decides to restrict fuel exports to maintain its domestic market, it could exacerbate the global fuel crisis, which is facing a diesel shortage. Overall, this issue cannot simply be resolved by diversifying suppliers, as suitable suppliers for diversification do not exist and demand is increasing.
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