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China’s Refiners Halt October Fuel Exports as PetroChina Scraps Planned Cargoes
Chinese oil refiners have stopped shipping fuel to markets outside Hong Kong and Macau until Beijing says otherwise, a move that threatens to squeeze an already strained global fuel market just as the Middle East conflict and sanctions on Russia continue limiting supply elsewhere.
Four people briefed on the matter told Reuters the suspension took hold Thursday, coinciding with the start of China’s week-long Golden Week holiday, which runs through October 7. State oil major PetroChina, the country’s largest refiner, canceled the majority of its gasoline and jet fuel shipments planned for October on Wednesday, according to three of the sources, scrapping deals it had only committed to within the previous two weeks. The stated reasoning behind the halt is straightforward: Beijing wants to protect domestic fuel supply rather than let more product flow out to international buyers while global energy markets remain this unsettled.
What happens once the holiday ends is genuinely uncertain. Sources told Reuters it isn’t clear whether Chinese authorities will resume allowing exports once trading resumes on October 7, and that any decision is likely to hinge on how domestic fuel inventories and refinery output look by then. In other words, this isn’t being framed internally as a fixed, time-limited pause tied purely to the holiday calendar, but as a decision that could extend further depending on how tight China’s own supply situation looks in the days ahead.
Markets reacted almost immediately. The prompt spread for gasoline and diesel across Asia, the price gap between cargoes available for immediate delivery and those for purchase the following month, widened noticeably late Wednesday as traders absorbed the news, a classic signal that the market expects supply to tighten in the near term. Asian diesel refining margins climbed back to around $75 a barrel, their highest level in a week, while the spread between October and November pricing reached a two-week high, both signs that traders are already pricing in less Chinese product reaching the open market in the coming weeks.
The timing makes the suspension more consequential than it might otherwise be. Global fuel markets have spent months absorbing the fallout from the war between the US, Israel and Iran, which has disrupted shipping through the Strait of Hormuz and damaged a substantial share of the Middle East’s refining infrastructure. Sanctions limiting Russian fuel exports have added further strain on top of that. China ranks among Asia’s top three fuel exporters, behind only South Korea and Singapore, which means any meaningful pullback in Chinese shipments removes a genuinely significant volume of supply from a market that has had very little slack to spare this year. Analysts have warned that a sustained reduction in Chinese exports could push fuel prices to fresh highs in some countries already grappling with elevated costs.
This isn’t the first time this year China has pulled back on fuel exports in response to the broader crisis. Beijing had previously imposed restrictions on fuel exports at the peak of the Strait of Hormuz disruption earlier in the conflict, before lifting those limits in mid-July once conditions eased somewhat. That reopening triggered a genuine rebound: Chinese refiners exported 6.01 million tons of petroleum products in August alone, up 12.7 percent from a year earlier, as exports surged through the July-to-September stretch. That same surge, however, appears to have drawn down Chinese refiners’ own domestic stockpiles faster than expected, with gasoline and diesel inventories now sitting at multi-year lows, a shortage that analysts expect to persist through the end of October given how much fuel left the country in recent months combined with continued strong domestic demand.
China’s export quota system adds another layer of context to how this situation can shift so abruptly. Beijing issued its first batch of fuel export quotas for the year back in December, covering gasoline, diesel and jet fuel, alongside a separate quota for 8 million tons of low-sulfur bunkering fuel, combining for a total allowance of roughly 13.76 million tons across gasoline, diesel and jet fuel. Quotas of this kind give Chinese authorities a built-in lever to throttle exports quickly whenever domestic conditions call for it, without needing new legislation or a lengthy policy process, which helps explain how refiners went from a strong export rebound in August to a full suspension by the start of October within the span of just a few weeks.
One detail worth noting from earlier in the crisis is that China’s restrictions have at times carved out specific exceptions even during tighter export periods, excluding jet fuel used for refueling international flights and bunkering fuel contracts that keep commercial shipping moving, a recognition that cutting off those specific categories would create disruption well beyond fuel pricing alone. It remains to be seen whether this latest suspension includes similar carve-outs, since the sources who spoke to Reuters didn’t specify whether jet fuel for international flights or bunkering contracts are affected this time around.
For now, global fuel traders are left watching two things simultaneously: how much further Asian refining margins and price spreads move while China’s refiners sit on the sidelines, and whether Beijing signals any change in posture once the Golden Week holiday wraps up on October 7. Given how tightly China’s own domestic fuel inventories are already stretched, there’s a reasonable chance the suspension outlasts the holiday itself, extending a supply squeeze that was already building well before this week’s announcement.
