China Halts Fuel Exports Until Further Notice

China has suspended fuel exports indefinitely, according to multiple sources, which could further tighten the global fuel market. State-owned PetroChina has canceled some gasoline and jet fuel shipments that were to be sent in October. The country previously imposed fuel export restrictions in the spring and early summer as it sought to safeguard its domestic fuel supply amid the Strait of Hormuz crisis.

However, Beijing lifted most of these restrictions in mid-July, allowing refiners to increase overseas shipments and alleviate the fuel shortage in Asia. In August, China's fuel exports hit 6.01 million tons, a 12.7% increase compared to the previous year, following the removal of these limitations. Despite the surge in fuel exports between July and September, new restrictions seem to be in effect for October.

The reason for the halt is unclear, but it may be due to Beijing not authorizing fuel exports outside Hong Kong and Macau prior to the Golden Week public holiday that begins on October 1. It is uncertain whether China will permit any fuel exports after the holiday concludes on October 7. Experts have previously suggested that China might reduce its fuel exports again in October, potentially exacerbating the global fuel market shortage further, as domestic gasoline and diesel inventories in China are at multi-year lows.

The tight global fuel markets could face an additional supply setback if China continues to prioritize domestic market needs and restricts fuel exports once more.