China Eases Fuel Export Curbs as Global Supply Crunch Deepens

China has relaxed fuel export limits, allowing refiners to ship 2.7 million tons of oil derivatives overseas, with the exception of Hong Kong and Macau, according to Reuters. The temporary suspension of export caps will remain in place this month, but refiners can also extend certain volumes into September if they struggle to find buyers for the complete allocation. These new quotas encompass gasoline, diesel fuel, and jet fuel.

The Chinese government had previously limited state refiners to exporting 800,000 tons of refined fuels in July, following the outbreak of the Middle Eastern conflict in late June. This move aimed to curb fuel supply issues that had worsened due to the closure of the Strait of Hormuz. Prior to the crisis, China had directed energy companies to halt new fuel export agreements and attempt to cancel existing shipments abroad as global fuel markets became increasingly tense due to the ongoing war.

In April, China eased the export restrictions as domestic fuel reserves surged, alleviating concerns about the security of fuel supplies for the domestic market. This was largely attributed to China's substantial crude oil reserves, which stood at over a billion barrels at the beginning of the Middle Eastern conflict. In June, Chinese fuel exports surged by 18% year-on-year, reaching a record high of 577,000 barrels per day as the world scrambled to secure the fuel essential for powering ships.