China’s refiners have halted fuel exports until further notice, multiple sources briefed on the matter told Reuters on Thursday in a development that could further tighten the global fuel market.
PetroChina, the state major, has canceled some gasoline and jet fuel cargoes that were expected to be shipped in October, according to the sources.
China suspended fuel exports in the spring and early summer as it looked to protect its domestic fuel supply amid the Strait of Hormuz crisis. As of the middle of July, Chinese authorities removed most restrictions on fuel exports, allowing refiners to boost overseas shipments and ease the fuel crunch in Asia.
China’s fuel exports recovered in August as refiners exported 6.01 million tons of petroleum products, up by 12.7% from a year earlier, after Beijing removed restrictions in mid-July.
Fuel exports from China soared between July and September, but it appears new restrictions are in place in October as China did not authorize fuel exports beyond Hong Kong and Macau ahead of the week-long Golden Week public holiday starting on October 1. It is not clear if China would authorize any fuel exports after the holiday week ends on October 7.
Analysts last week said that China could lower its fuel exports again in October, potentially tightening the global fuel market further, as domestic gasoline and diesel inventories have slumped to multi-year lows.
October exports could be lower due to the seven-year-low gasoline and diesel inventories in China, GL Consulting, a consultancy owned by MySteel, said last week.
With “domestic supply already relatively constrained and internal demand strengthening, refiners are likely to prioritise the domestic market,” GL Consulting said.
The tight global fuel markets will suffer another blow to supplies if the domestic market priority is a government policy in China and Beijing restricts fuel exports again.
By Tsvetana Paraskova for Oilprice.com
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