The Chinese government has moved to ban all fuel exports amid a worsening supply crunch because of the severe disruption in tanker traffic in the Strait of Hormuz. The ban covers gasoline, diesel, and jet fuel, unnamed sources told Reuters.
The restrictions will take immediate effect, applying to all cargoes that had not passed through customs as of March 11, the sources also said.
Earlier this month, China asked state-owned energy exporters to find ways to cancel outgoing cargoes and suspend export contracts to secure domestic supply before it gets too tight.
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.
The country, however, is in a much better position than the other large Asian importers of energy commodities. It has been stockpiling crude for over a year now, with plans in place to significantly increase storage capacity as well. There are also some 40 million barrels of sanctioned crude from Russia, Iran, and Venezuela on tankers off the Chinese coast, Kpler reported earlier this week.
The crude volumes in floating storage, with more than three-quarters of the tankers laden with Iranian oil, have jumped by 17% compared to the week before the Middle East war started.
Meanwhile, traders predicted that Chinese fuel exporters would ramp up shipments this month to take advantage of higher prices. Total monthly volumes were seen at between 2.2 and 2.3 million tons for the three major fuels, which would have been an increase of between 300,000 and 400,000 tons from February export estimates, Reuters noted in its report from today.
By Irina Slav for Oilprice.com
