China suspends October fuel exports to secure domestic supply

Chinese refiners have halted the majority of refined fuel exports for October, a decision that removes a significant volume of diesel, gasoline and jet fuel from a global market already facing severe constraints. Beijing has prioritised domestic supply security, cancelling shipments that were previously scheduled for delivery during the current month. This withdrawal of Chinese barrels from the international trade flow exacerbates existing shortages in key fuel categories.

According to reports from Reuters, PetroChina has cancelled several cargoes of gasoline and jet fuel that were slated for October. Additionally, Zhejiang Petrochemical did not schedule any exports during China’s week-long National Day holiday. Four sources familiar with the matter indicated that the Chinese government has not yet authorised October exports to destinations outside of Hong Kong and Macau. However, officials suggest that shipments could resume after the holiday concludes on October 7, provided that domestic inventories and refinery output levels permit such a move.

The suspension follows a notable deterioration in China’s internal fuel stock positions. Data from Kpler estimates that commercial diesel and gasoil inventories are currently approximately 20 million barrels below pre-war levels. Furthermore, gasoline stocks are roughly 9 million barrels short of the threshold that Beijing aims to restore before allowing exports to normalise. This contrasts with the summer period, when Chinese exports had increased significantly. Official customs data revealed that total oil-product exports reached 6.01 million tonnes in August, marking a 12.7 per cent year-on-year increase and the highest level since March 2024, according to S&P Global. At that time, refiners noted that Beijing had not yet restricted clean-product exports despite tightening domestic supply.

The current reversal occurs against a backdrop of global diesel supply pressures driven by Middle Eastern disruptions and Ukrainian attacks on Russian refineries. S&P Global warned this week that Asian fuel markets possess limited surplus supply. Consequently, any further restriction on U.S. diesel exports would intensify competition for barrels from Asia and the Middle East. Meanwhile, the Chinese government has intervened to mitigate the domestic impact of high international oil prices. Authorities partially suppressed scheduled gasoline and diesel price increases in September while instructing refiners to ensure stable domestic supplies.