China has told energy companies to suspend new fuel export contracts and try to cancel already arranged fuel shipments abroad as global fuel markets tighten amid the Middle Eastern war that has effectively frozen most traffic through one of the world’s biggest oil and fuel chokepoints.
Citing unnamed trading and energy industry sources, Reuters reported today that the call, made by the authorities in Beijing to fuel exporters, excluded jet fuel contracts for refuelling for international flights and bunkering fuel contracts.
Bloomberg, for its part, noted that the government had insisted the suspension of exports is implemented immediately. If true, this suggests that China is concerned about fuel supply availability despite its abundant oil in storage volumes, accumulated last year at a rate of close to a million barrels daily.
China is a top-three fuel exporter in Asia, after South Korea and Singapore; as such, it has been undermining other countries on the continent with refining industries. A suspension of fuel exports could have boosted the refining industries of other countries had it not been prompted by tightening crude oil supply due to the traffic disruptions in the Strait of Hormuz. Per Bloomberg, there is virtually no outbound tanker traffic through the chokepoint.
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China’s government issued the first batch of fuel export quotas in December, including gasoline, diesel, and jet fuel. In addition to those, Beijing also issued export quotas for 8 million tons of low-sulfur bunkering fuel. The bulk of the quotas, at over 70%, are going to state-owned energy majors Sinopec and CNPC. The two together received fuel export quotas for a total of 13.76 million tons of gasoline, diesel, and jet fuel.
Reuters cited LSEG data as showing Chinese refiners had already exported some 70,000 tons of jet fuel, 35,000 tons of diesel, and 35,000 tons of gasoline since the start of the month.
By Irina Slav for Oilprice.com
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