China halts fuel exports for October, threatening Asia's supply of diesel, petrol and jet fuel

China has stopped exports of petroleum products for October to all markets other than Hong Kong and Macau. The decision is reported to have been taken to strengthen fuel stocks within the country. China is one of the world's largest refining hubs, so the move is feared to affect the supply of petrol, diesel and jet fuel in Asia.

China's major refining companies have not so far been given permission to ship fuel outside Hong Kong and Macau in October. Beijing is believed to have put the country's own supply first as pressure grew on domestic stocks of petroleum products.

China had imposed curbs on fuel exports earlier as well. Exports were then restarted to some extent in July. But they have now been halted again from the start of October. It is not yet clear whether permission will be given again after October 7.

Fuel has been exported from China on a large scale, and Singapore, Australia, Malaysia and other Asian markets were benefiting from it. If China's exports fall, these countries may have to buy fuel from other suppliers.

The diesel market is feared to be hit in particular. Diesel supply in Asia is already somewhat tight. If diesel coming from China falls, competition among importers for other cargoes could intensify, which could affect international diesel prices.

China's decision comes at a time when the global fuel market is already under pressure because of the conflict in the Middle East and attacks on Russian refineries. Russia has also extended its restrictions on diesel exports until October.

A fall in supply from China could add pressure on Asian refining margins and on prices of fuels such as diesel. However, there is talk of Europe releasing strategic diesel stocks into the market, which could bring some additional supply. The direction the market takes in the coming days therefore depends on how long China's export ban lasts and how much alternative fuel is available from other countries.