China has allowed its state energy companies to export more fuels next month after a temporary suspension of all such exports in March. The volumes approved for export in May, however, are much lower than they were a year earlier.
Beijing has approved fuel exports of 500,000 metric tons for May, Reuters reported today, citing unnamed sources in the know. This is up from an estimated 320,000 tons in exports this month, according to Vortexa. However, it is significantly lower than the average 1.6 million tons in fuel exports out of China last year, per Kpler data.
Bloomberg reported on Tuesday that companies, including Sinopec and CNPC, have submitted applications for export permits. The applications are for exports of diesel and gasoline, the report, which also cited unnamed sources, said.
In early March, 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.
Now, Beijing will also set the destinations for the fuel exports, with Reuters’ sources saying receiving countries would include Cambodia, Laos, Australia, Bangladesh, the Maldives, and Myanmar.
The war between the United States, Israel, and Iran has caused shortages in diesel and jet fuel, with energy industry executives warning of severe consequences for the global economy unless fuel flows resume soon.
Gunvor’s head of research, Frederic Lasserre, said at a recent industry event that “If you don’t get any reopening in three months time, then the case becomes a macro issue where the world is about to fall into recession.” Lasserre added, “And then you have massive demand adjustment.” Trafigura’s chief economist, Saad Rahim, for his part, said the world was already “at a critical inflection point.”
By Irina Slav for Oilprice.com
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