China orders refineries to halt fuel exports amid Gulf tensions

The Chinese government has instructed the nation’s leading oil refineries to suspend exports of diesel and gasoline as the escalating conflict in the Gulf threatens to disrupt crude oil flows from one of the world’s primary production hubs.

According to individuals familiar with the matter, officials from the National Development and Reform Commission (NDRC)—the country’s top economic planning agency—convened with refinery executives and issued a verbal directive to halt the shipment of refined petroleum products, effective immediately.

Sources speaking to Bloomberg indicated that refineries were instructed to cease signing new contracts for diesel and gasoline and to negotiate the cancellation of previously agreed-upon shipments. However, exemptions have been granted for jet fuel and bunker fuel held in bonded warehouses, as well as for supplies destined for Hong Kong and Macau.

PetroChina Co., Sinopec, CNOOC Ltd., Sinochem Group, and the privately owned Zhejiang Petrochemical Co. are among the companies that regularly receive fuel export quotas from the government.

While China possesses an extensive refining sector, it is not a critical global supplier, as the majority of its production is geared toward domestic demand. In terms of seaborne exports, it ranks third in Asia, trailing South Korea and Singapore. Nevertheless, Beijing’s preventive restrictions underscore efforts to prioritize internal requirements as the region—dependent on imports—confronts a deepening crisis in the Middle East.

Since the commencement of US and Israeli strikes over the weekend, there has been a near-total cessation of oil and fuel exports from the Persian Gulf. Concurrently, refineries across the region, stretching from Japan to Indonesia and India, have begun reducing production rates and suspending exports.

Although China has actively sought to diversify its hydrocarbon supplies in recent years, approximately half of its crude oil imports still originate from the Gulf region, including nearly all shipments from Iran.