China Halts Fuel Exports in October as Brent Surges Above $102

Chinese refineries halted exports of diesel, gasoline, and jet fuel to destinations outside Hong Kong and Macau during October, with the start of the Golden Week holiday, Reuters reported citing four sources. The sources added that the decision remains in effect until further notice, while PetroChina canceled some gasoline and jet fuel shipments scheduled for this month.

This move pushed oil prices higher, as the benchmark December Brent crude contract closed at $102.31 per barrel, recording a 4.37% increase, or $4.28. In the same context, West Texas Intermediate (WTI) crude ended the trading session at $92.87, up 2.71%, or $2.45.

The decision highlights global markets' reliance on Chinese refined products, as China's exports reached 6.01 million tons in August, marking a 12.7% year-on-year growth. Consequently, the suspension of shipments takes on added significance at a time when China's gasoline and diesel inventories stand at seven-year lows.

For his part, Giovanni Staunovo of UBS said the export ban points to concerns over domestic product availability, while Hamad Hussain of Capital Economics described it as an additional source of pressure on global fuel markets. So far, Beijing has not announced whether export permits will resume after October 7.

What do these terms mean?

Brent crude is an oil blend extracted from the North Sea used as a global benchmark for pricing other crudes, while West Texas Intermediate (WTI) is the U.S. benchmark. The December contract refers to an agreement to deliver a specific cargo in that month, serving as the most actively traded contract to gauge market direction. As for Golden Week, it is a week-long national holiday in China featuring surged travel and consumption, and refined products are fuels produced by refineries, such as gasoline, diesel, and jet fuel.