Oil prices rise 2pct as China suspends fuel exports
LONDON: Oil prices rose around two per cent on Thursday after China suspended oil products exports, potentially tightening fuel markets already coping with supply shortages globally, while investors continued to assess renewed diplomatic efforts to end the US-Iran war.
Oil prices surged around two percent on Thursday following China's suspension of fuel exports, potentially tightening already strained global fuel markets amid supply shortages, while investors monitored ongoing diplomatic efforts to end the US-Iran conflict. The front-month December Brent crude futures contract traded at $100.09 per barrel at 0829 GMT, up 2.1 percent, or $2.06, from Wednesday's close.
The November contract expired on Wednesday, settling at $103.50 per barrel, marking a monthly gain of about 14 percent in September for the front-month contract. US West Texas Intermediate crude increased by $2.06, or 2.28 percent, to $92.48 a barrel. Prices were volatile in Thursday's trading, having dropped more than one percent in early trading before rebounding.
Chinese refiners suspended exports of oil products to regions outside Hong Kong and Macau until further notice, a decision prompted by concerns about domestic product availability, according to UBS analyst Giovanni Staunovo. The Chinese export ban indicates fears about fuel supply shortages. Global diesel supplies have tightened due to reduced refining capacity caused by attacks linked to conflicts in the Middle East and Ukraine, putting pressure on governments to intervene and shield consumers.
The Trump administration instructed Germany and France to reduce emergency diesel inventories to help alleviate global fuel price pressures or face the possibility of a US diesel export ban, according to three people familiar with the discussions. European diesel refinery profit margins were trading at $80.05 per barrel at 0829 GMT, down about four percent from the previous session, having hit an all-time high of $95 per barrel on September 23.
Investors continued to monitor diplomatic efforts and oil exports in the Middle East. Saudi Arabia resumed oil tanker loadings from Yanbu on Tuesday after restarting operations on its East-West Pipeline, while Iran stated it had received a US response to its latest proposal to revive the collapsed ceasefire in the Gulf. However, US President Donald Trump denied reports citing his willingness to provide Iran sanctions relief and release frozen Iranian funds in exchange for concrete steps by Tehran on its nuclear program.
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