On Wednesday (March 4), Bloomberg reported, citing sources familiar with the matter, that due to the impact of the Iran war, the Chinese government has notified several of the largest refineries in the country to suspend the export of diesel and gasoline.
China is the third-largest exporter of oil products in the Asian region, but announced restrictive measures just six days after the outbreak of the Iran war, reflecting a trend of the Communist Party prioritizing domestic demand as the Middle East crisis intensifies.
Sources revealed that officials from the National Development and Reform Commission (NDRC), China’s top economic planning body, convened a meeting earlier this week and instructed senior executives of refineries to immediately halt the export of finished oil products. In addition, they also requested that refineries stop signing new export contracts and negotiate existing export agreements.
The sources added that aviation kerosene and marine fuel oil stored in bonded warehouses, as well as fuels transported to Hong Kong and Macau, are not subject to these restrictions.
State-owned enterprises such as PetroChina, CNOOC, Sinopec, China National Chemical Corporation, and private enterprise Zhejiang Petrochemical regularly obtain fuel export quotas from the government, and these companies have not responded to the events.
Even in normal times, Beijing does not allow unrestricted exports of finished oil products such as gasoline, diesel, and aviation kerosene. They operate under a quota system, where only a few large refineries and traders designated by the Ministry of Commerce can obtain quotas.
Since Russia’s invasion of Ukraine in 2022, Beijing has frequently reduced energy product export quotas or postponed quota allocations, leading to a decrease in exports.
Since last Saturday (February 28), the United States and Israel have launched airstrikes on Iran, and Iran has announced its intention to target all tankers passing through the Strait of Hormuz and ships transporting liquefied natural gas.
So far, nine vessels have been retaliated against by Iran in the Gulf waters, with hardly any oil or fuel being shipped out of the Persian Gulf.
Nearly half of China’s oil imports come from the Gulf region, including almost all of Iran’s oil exports.