China is raising the volume of fuels it is allowing state refiners to export, in a move that would alleviate concerns about tight refined petroleum supplies in Asia.
China’s authorities this week met with executives from Chinese state-controlled refiners and told them they are now allowed to export up to 800,000 metric tons of refined petroleum products in July, trade sources told Reuters on Thursday.
That would be up from an estimated total export volume of about 600,000 tons for June.
China is also removing destination restrictions for fuel exports, according to the sources.
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Days after the conflict in the Middle East erupted and led to the closure of the Strait of Hormuz, the Chinese government moved to ban all fuel exports amid a worsening supply crunch, with the exception of some volumes shipping out to certain countries in Southeast Asia.
At the time, China told energy companies to suspend new fuel export contracts and try to cancel already arranged fuel shipments abroad as global fuel markets tightened amid the Middle Eastern war that effectively froze most traffic through one of the world’s biggest oil and fuel chokepoints.
In April, China eased the export restrictions as domestic fuel stockpiles soared.
Despite the fact that Beijing has raised the amount of fuels it is allowing to be exported by the state refiners, overall Chinese exports remain well below the levels from before the Iran war.
The allowed shipments in July would be 40% lower compared to the same month last year, according to Reuters estimates.
Chinese refiners, meanwhile, have slashed run rates to multi-year lows amid high crude prices, weak domestic fuel consumption, and restricted exports.
The independent refiners in China, the so-called teapots, have slashed their refinery run rates to the lowest level since 2017. All Chinese refiners on average have reduced their run rates to the lowest in four years as crude imports slumped to an eight-year low.
By Tsvetana Paraskova for Oilprice.com
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