Chinese oil refining companies have been directed by the government not to export diesel and petrol as war in the West Asian region continues with little signs of resolution in the near future.
Officials from the National Development and Reform Commission, China’s top economic planner, met some of the country’s largest refiners to verbally direct them for a temporary suspension of refined product shipments, according to a report by Bloomberg citing sources.
The export suspension will take effect immediately, the report added.
The refiners have not only been asked to stop signing new contracts but also seek the cancellation of already agreed shipments as supplies from the Middle East have come to a halt because of the war.
However, an exception was made for jet and bunker fuel held in bonded storage and supplies to Hong Kong and Macau.
Government-backed companies like PetroChina, Sinopec, CNOOC, Sinochem Group and private refiner Zhejiang Petrochemical regularly obtain fuel export quotas from the authorities, according to the report.
Though China has a vast refining sector, most of the production is used to meet domestic demand. As oil supply through the West Asian region dries down, the country is bracing for difficult days ahead, prioritising domestic needs.
Since the start of the US-Israel-Iran war, oil shipments through the Strait of Hormuz have stopped. The narrow water passage between Oman and Iran caters to almost 20 percent of global oil shipments.
Facing attacks from the Israel-US duo, Iran has threatened to destroy tankers passing through the Strait.
The move to restrict export of petrol and diesel by China comes amid other Asian countries also planning to start rationing of oil to limit the impact of rising crude prices.
Some Indian gas companies have announced limiting supply to industries while some have declared force majeure on gasoline exports.
Brent Crude on Thursday was trading at around $84 per barrel, rising from below $70 before the war. Experts have warned that the commodity may hit the $100 mark if the crisis does not get resolved early.
