China urges refiners to pause fuel exports amid Middle East conflict, sources say
A worker passes by oil pipes at a refinery in Wuhan, Hubei province, March 23, 2012. REUTERS/Stringer/File Photo
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SINGAPORE, March 5 (Reuters) - China has requested oil firms to halt signing new contracts for exporting refined fuels and to seek cancellation of shipments already committed, as the widening conflict in the Middle East tightens refinery output, according to several industry and trade sources familiar with the matter.
The guidance does not apply to jet fuel used for international flights, bonded bunkering operations, or shipments to Hong Kong or Macau, the sources said.
The National Development and Reform Commission did not immediately respond to a request for comment.
Reduced Chinese fuel exports, with China being a major Asia-Pacific supplier, are expected to worsen already tight fuel availability in the region and push refining margins higher.
Diesel processing margins stood around three-year highs near $49 per barrel, according to LSEG pricing data on Thursday, while jet fuel cracks exceeded $55 per barrel.
Because most of March’s export program had already been fixed and cargoes are difficult to recall, experts expect the new directive to impact shipments from April onward, the sources added.
For March, combined exports of gasoline, diesel, and jet fuel were expected to stay steady versus earlier industry estimates of about 3.8 million metric tons, as firms sought to lock in robust Asian crack margins, multiple sources noted.
LSEG ship-tracking data indicated roughly 70,000 tons of jet fuel, 35,000 tons of diesel, and 35,000 tons of gasoline have already been shipped this month.
China manages its refined-fuel exports through a quota system to balance domestic supply and demand. The first 2026 quota batch was little changed from a year earlier, totaling 19 million tons.
Three regional buyers of China-origin cargoes told Reuters on Thursday they would still receive their March deliveries in line with previously scheduled loads.
At least two Chinese refineries— privately owned Zhejiang Petrochemical Corp and Sinopec-operated Fujian refinery—have started cutting throughput this month, and more plants are expected to reduce output as the Middle East conflict disrupts crude flows and drives prices higher.
(Note: 1 ton approximates to 7.45 barrels for diesel/gasoil, 7.88 barrels for jet fuel, and 8.45 barrels for gasoline.)
Reporting by Siyi Liu, Trixie Yap, and Chen Aizhu; Editing by Christopher Cushing and Kate Mayberry
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