China is set to resume exports of refined fuels in October after a brief pause during its Golden Week holiday, a move that should help ease tight global markets for diesel, gasoline and jet fuel, according to reports.
Beijing has approved October exports of the three fuels at around 3.7 million metric tons combined, according to industry participants. By comparison, refiners were expected to export slightly more than 4 million tons in September, so the October programme is a resumption rather than an expansion.
The world’s biggest oil importer began curbing fuel exports in March to safeguard domestic supplies as war in the Middle East disrupted crude flows and refinery production, but relaxed controls between July and September. While China typically regulates fuel exports through a quota system, it has recently tightened oversight by vetting shipments on a month-by-month basis.
China has the world’s largest refining capacity, and though its fuel export volumes have typically lagged behind India and South Korea among Asian processors, its refined products are sought after because of the disruptions, particularly in Asia. Between January and August, exports of the three fuels combined were 19 million tons, down 21 percent from the year-earlier period, customs data showed.
War in the Middle East and the conflict between Russia and Ukraine have disrupted refined fuel output globally and driven up prices, particularly for diesel, which is why any additional Asian supply draws attention well beyond the region. Diesel powers trucking, agriculture and construction, so its price feeds quickly into the cost of goods on U.S. store shelves.
Analysts cautioned that the move would only modestly ease market tightness, saying markets remain tight overall while Middle Eastern supplies are still disrupted. One analyst described the resumption as expected but said the volumes were lower than anticipated. For U.S. drivers and airlines, any additional supply into global diesel and jet fuel markets is welcome, but few expect a single month’s programme from Beijing to transform prices on its own. The next test will be whether November shipments are vetted at a similar level.
