China is again restricting exports of diesel, jet fuel and gasoline, threatening to squeeze global energy markets already strained by fuel supply disruptions.
China’s state-owned oil giants have recently started slowing exports of refined products, according to oil analysts in regular contact with the companies. Shipments are continuing to countries with close ties to Beijing, including Cambodia, but the government has stopped granting new commercial export permits to wider global markets.
The move echoes restrictions Beijing imposed in March after the war in Iran disrupted oil flows through the Strait of Hormuz. The sudden drop in Chinese fuel exports sent Asian countries scrambling for alternative supplies. Those restrictions were eventually eased. But this time, the curbs come as diesel markets are already contending with diminished supply.
Russia this week renewed a ban on diesel exports after Ukrainian drone attacks damaged refineries that also supply fuel to Russian forces in eastern Ukraine. A fire at an Indian refinery on Tuesday prompted its owner to halt some exports of refined products, including diesel, to prioritize domestic customers. And in the United States, President Trump has threatened to restrict diesel exports so as to lower costs for truckers ahead of the midterm elections.
China’s latest move sent diesel prices up 5 percent on Wednesday and Thursday in Singapore, Asia’s main energy trading hub, even as crude oil prices fell almost 10 percent. Diesel prices gave up their gains on Friday, returning to about $170 a barrel after European countries discussed whether to release diesel strategic reserves into the market.
Jet fuel prices have also climbed in East Asia, raising the prospect of higher airline costs and ticket prices. Fuel is one of the two main expenses for airlines, along with labor.
China’s restrictions amount to “a significant tightening of the diesel market at a time when the diesel market is already in crisis,” said Tom Reed, a longtime specialist in China’s oil policies at Argus, a commodities pricing and energy research firm in London.
Mr. Reed estimated that the restrictions would reduce China’s exports of refined products to 480,000 barrels a day in October, from an earlier forecast of 750,000 barrels. After refiners exercise export quotas left over from September, shipments could fall to 300,000 barrels per day in November unless Beijing changes course, he added.
Uncertainty remains about how long the restrictions will last. Muyu Xu, an oil analyst at Kpler, a commodities research and ship-tracking firm, said it was unclear whether Beijing has imposed a lasting halt or had delayed approving new export licenses because of a weeklong national holiday that started on Thursday. The market may have to wait until next week for a clearer signal, she said.
“They’ve still got time to reassess the situation,” she said.
Reuters reported earlier that Chinese refiners had suspended exports of oil products beyond Hong Kong and Macau until further notice.
The country’s largest refiner, China Petroleum and Chemical Corporation, or Sinopec, told industry experts last month that it would begin curbing production and exports in October in response to a directive from the National Development and Reform Commission, China’s main economic planning agency.
The company did not immediately respond to a request for comment.
The decision reveals, in part, Beijing’s concern about rising crude prices. China is the world’s largest importer of oil and officials are wary of encouraging refiners to buy more crude when global prices are high. Domestic diesel demand is also rising during China’s autumn harvest.
Sinopec, which relies heavily on imported crude, has already started reducing the amount of oil processed at its refineries, Ms. Xu said. Its main rival, PetroChina, relies more on domestic crude. Both companies are majority-owned by the Chinese government, but some of their shares are publicly traded. PetroChina did not respond to phone calls or an email for comment.
Another pressure is coming from Iran.
For years, China’s smaller private refineries have bought almost all of Iran’s crude oil exports at steep discounts, despite Western sanctions intended to pressure Tehran over its nuclear program. Those refiners sell diesel, gasoline and jet fuel primarily inside China, leaving the large state-owned refiners with more fuel available for export.
But seaborne shipments of Iranian crude arriving in China have dried up over the past two months because of an American naval embargo outside the Persian Gulf. The private refiners kept running at full capacity through September, Mr. Reed said, drawing down crude inventories to take advantage of high prices for refined products.
China faced a similar squeeze earlier this year. In the early days of the war in Iran, Beijing restricted oil-product exports from mainland China with a few exceptions, including Hong Kong and Macau and a few closely aligned countries. Chinese exports of refined products fell to about 300,000 barrels a day from April to June, alarming Asian countries that rely heavily on Chinese refineries.
Vietnam, the Philippines and Australia were among those that appealed to Beijing. Vietnam faced a jet fuel shortage that forced its national carrier to cancel flights. In the Philippines, the agriculture secretary pressed China’s ambassador over restrictions on fertilizer exports. Australia’s foreign minister traveled to Beijing in April, an appeal that was followed by a broader Chinese commitment to cooperate with Australian companies.
Chinese exports of gasoline, jet fuel and diesel recovered to prewar levels in July and nearly doubled in August, according to Chinese customs data.
Now, those assurances are being tested as China’s inventories shrink and Iranian crude remains unavailable.
In a statement on Friday, a spokesperson for Australia’s Department of Foreign Affairs and Trade said it continued to “engage with China and other countries” and was focused on securing energy supplies and supporting regional energy security.
Murphy Zhao and Li You contributed reporting.
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