China's fuel exports edge back towards levels before Iran war as Beijing eases curbs

Beijing, China, has seen a slight resurgence in its fuel exports as it eases curbs following the Iran conflict, according to customs data released on Tuesday. In July, China's refined oil exports increased 6.7% from the previous month, marking a 12.9% decline compared to the same period last year. The key fuel supplier to Asia tightened its export restrictions in March to safeguard its domestic market from the oil shock triggered by the closure of the Strait of Hormuz during the Iran war.

Beijing loosened these controls in July and again in August, allowing exports to surpass pre-war levels. In July 2023, refined oil exports, comprising diesel, gasoline, aviation fuel, and marine fuel, amounted to 4.65 million metric tons, a rise from 4.36 million in June when exports surged 29% from May. Diesel exports nearly returned to July 2022 levels, expanding 88% month-on-month to 810,000 tons, roughly 50% higher than the annual average.

Increased exports benefit customers in a tight market, and they are a prerequisite for normalizing China's oil imports, which remain significantly below pre-war levels. Despite allowing refiners to export more, China's crude oil imports remained unaffected by the Iran war, while gas imports hit a multi-year low. Although gasoline exports declined 55.3% year-on-year to 420,000 tons, they rose 320% from June.

Aviation fuel exports increased 42% from June to 1.32 million tons in July, but were down 33% from the same period last year. LNG imports also rose 2.4% year-on-year to 5.5 million tons in July, with first seven months of 2023 witnessing a 4.6% drop compared to the same period last year.