Chinese Refiners Reportedly Suspend October Fuel Exports Outside Hong Kong, Macau; PetroChina Cancels Cargoes as Brent Tops $100

Chinese refiners have suspended oil product exports for October to destinations beyond Hong Kong and Macau, according to four people briefed on the matter cited in a Reuters report carried by AOL, as Beijing moves to preserve domestic fuel stocks. The news helped push Brent crude above $100 a barrel on Thursday, reversing an earlier decline, according to CNBC.

What was reported

China entered a week-long national holiday on Thursday without major refiners in the country's refining hub receiving a green light to export fuel products to regions other than Hong Kong and Macau in October, the sources told Reuters, as relayed by AOL. State oil major PetroChina cancelled a handful of gasoline and jet fuel shipments planned for October on Wednesday, three of the sources said, even though the company had committed to most of those cargoes over the prior two weeks. Separately, privately controlled Zhejiang Petrochemical Corp (ZPC) skipped scheduling any oil product shipments during the holiday week, a fourth source said.

There has been no official confirmation of the move. China's National Development and Reform Commission did not immediately respond to a request for comment during the public holiday, and PetroChina and ZPC also did not respond, according to the same report cited by Livemint. CNBC said it could not independently verify the report. It remains unclear whether Beijing will resume permitting exports once the holiday ends on October 7; sources said that could hinge on domestic fuel inventories and refining output.

Why Beijing may be holding back supply

Beijing restricted fuel exports in March after the Iran war disrupted Middle Eastern crude supplies, relaxed those curbs in July, and has since managed diesel, gasoline and jet fuel shipments on a monthly basis, per the AOL report. Exports have reportedly been made contingent on domestic stocks returning to pre-war levels. Kpler's senior manager for clean oil products, Zameer Yusof, said the firm's analysis shows commercial gasoil and diesel inventories sitting around 20 million barrels below that threshold, with gasoline roughly 9 million barrels short, "so a pause on those products was likely."

Michal Meidan, head of China energy research at the Oxford Institute for Energy Studies, said the episode "highlights that the government's focus remains domestic supply security. International markets are an afterthought." She added that although refiners would like to capitalise on strong export margins, and China theoretically has the capacity to ramp up refining runs and exports, exports will stay limited unless domestic stocks are adequate.

Market reaction

Brent crude with December expiry was last seen trading 2.2% higher at $100.15 a barrel, having earlier traded 1% lower, while U.S. West Texas Intermediate futures with November expiry rose 1.5% to $91.74, according to CNBC. That left Brent trading roughly $8.41 above WTI, or about 9.2% higher by our calculation (100.15 minus 91.74, divided by 91.74). Oil had moved higher earlier in the session after Saudi Arabia resumed tanker loadings from its Red Sea port of Yanbu following the restart of the East-West Pipeline, easing some crude-supply worries, CNBC reported. UOB said in a note Thursday that crude flows from the Middle East were nearing pre-war levels, but fuel supplies, particularly gasoline, were lagging behind.

Refined-product markets also moved. October-November price spreads for Asian diesel swaps traded at a two-week peak on expectations that Chinese export supply will be absent, the AOL report said.

Who stands to feel it

September loadings totalled 1.4 million metric tons of diesel, 500,000 tons of gasoline and at least 2 million tons of jet fuel including bonded volumes to Hong Kong and Macau, trade estimates showed, a decline from August. Singapore, Malaysia, Australia, Vietnam, Bangladesh and the Philippines were among the top destinations for Chinese fuel exports in September, according to Kpler and LSEG data cited in the report.

Bangladesh, which sources up to a third of its refined fuel imports from China's Unipec and PetroChina, had not received any communication from them as of the report, a senior energy official said, adding the country could draw supply from elsewhere if required. Yusof said South Korean refiners could cover part of any gap, though their spot volumes would be limited by existing term commitments. Although China has the world's largest refining capacity, its fuel export volumes have typically lagged behind India and South Korea among Asian processors.

A wider diesel squeeze

China's pause follows President Xi Jinping's recent visit to Washington, where President Donald Trump urged him to help stabilise global fuel supplies, according to the AOL report. U.S. Energy Secretary Chris Wright said the world has lost diesel exports from the Middle East and China, with Washington expecting announcements soon from Europe about new diesel supplies. Reuters also reported that the Trump administration has told Germany and France to draw down emergency diesel inventories to help ease prices or face a potential U.S. diesel export ban. Separately, Russia extended its ban on diesel exports for fuel producers until October 31, a government statement cited by the Moscow Times and relayed by Livemint said, citing the need to maintain domestic market stability during harvest-season demand. Trump said on September 30 that he has conversations about banning diesel exports "every day," noting such a ban would have a negative impact on gasoline prices but could lower diesel costs.

Bottom Line

The reported Chinese export halt, still unconfirmed by Beijing or the refiners named, adds another supply-side constraint to a global fuel market already strained by the Iran war, Russia's extended diesel export ban and U.S. pressure on European reserves. Whether the suspension proves a short, holiday-driven pause or a longer restocking directive will depend on domestic fuel inventories and refining output, which sources told Reuters would be the deciding factors, and on decisions expected once the week-long Golden Week holiday ends on October 7.