China has decided to restart exports of fuels, after a one-week suspension. This should bring some relief to fuel markets, and especially diesel markets, where prices are running at record highs, not least because of the fuel export suspension news out of China last week.
The information comes from unnamed trading sources who spoke to Reuters, and who also told the publication Beijing has approved total fuel exports for October at 3.7 million metric tons, including gasoline, diesel, and jet fuel.
The news about fuel export suspensions broke on October first, with Reuters again citing sources as saying state-owned majors were even canceling already scheduled fuel export cargoes. The move followed a sharp deterioration in China’s own fuel-stock position. Kpler estimated commercial diesel and gasoil inventories are around 20 million barrels below pre-war levels, while gasoline stocks are roughly 9 million barrels short of the threshold Beijing wants restored before allowing exports to normalize.
“Suspending the product export quotas is a signal to the market that China is not confident that the crude flows from the Middle East are going to remain protected from further attacks in the Strait of Hormuz,” Sparta Commodities senior oil analyst June Goh told CNA earlier this week.
The temporary suspension also followed solid growth in fuel exports during the summer months. Official customs data showed total oil-product exports reached 6.01 million tonnes in August, up 12.7% year-on-year and the highest since March 2024.
Yet because it came at a time when global diesel supply is getting squeezed by a major imbalance between demand and supply, it had a painful effect on prices for the vital fuel, with the ripple effect going global. The latest update from Reuters, if confirmed, should serve to relieve some of the diesel price pain, even if it only lasts for a short while.
By Irina Slav for Oilprice.com
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