(March 5): China’s government has told the country’s largest oil refiners to suspend exports of diesel and gasoline as an escalating conflict in the Persian Gulf disrupts the arrival of crude from one of the world’s largest producing regions.
Officials from the National Development and Reform Commission (NDRC), the country’s top economic planner, met refinery executives and verbally called for a temporary suspension of refined product shipments that would begin immediately, according to people familiar with the matter. They asked not to be named as the discussions are not public.
The refiners were asked to stop signing new contracts and to negotiate the cancellation of already-agreed shipments, the people said. An exception was made for jet and bunker fuel held in bonded storage and supplies to Hong Kong and Macau, they added.
PetroChina Co, Sinopec, CNOOC Ltd, Sinochem Group and private refiner Zhejiang Petrochemical Co regularly obtain fuel export quotas from the government. None of the five responded to Bloomberg requests for comment. The NDRC also did not immediately respond to Bloomberg queries.
China has a vast refining sector, but much of its production is funnelled to serve domestic demand, meaning it is not a critical supplier. Across Asia, it ranks third for seaborne exports, behind South Korea and Singapore. However, Beijing’s precautionary curbs reflect efforts across the import-dependent region to prioritise domestic needs as the crisis in the Middle East deepens.
See also: Asian LNG dips from three-year high as traders weigh Hormuz plan
With virtually no oil or fuel making its way out of the Persian Gulf since US and Israeli attacks began at the weekend, refiners from Japan to Indonesia and India have begun cutting back run rates and suspending exports.
China has actively sought to diversify its hydrocarbon supply in recent years, but still receives close to half of its oil imports from the Gulf, including almost all Iran’s shipments.
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