China has introduced tighter export controls on refined oil products as part of efforts to protect its economy from the increasing turmoil resulting from the ongoing conflict in the Middle East, as reported by Bloomberg News. This decision follows a period of significant volatility in global energy markets linked to the hostilities involving the United States, Israel, and Iran.
As the second-largest economy globally and the biggest importer of crude oil, China predominantly focuses its refining capabilities on meeting the demands of its extensive domestic market. Last year, the country exported refined products, including gasoline, diesel, and jet fuel, amounting to 58 million tonnes, according to official customs statistics.
According to Bloomberg, Chinese refiners have started to revoke previously arranged export deals for refined fuels, based on insights from informed sources. The recent directive represents a more forceful approach than the earlier guidance issued last week, which had merely recommended that companies delay shipments but was largely viewed as optional. During a routine press briefing, spokesperson for the Chinese foreign ministry, Guo Jiakun, stated he was not aware of the specifics regarding the newly reported measures.
Global oil markets have faced disruptions following the onset of the conflict, leading to a temporary increase in prices above $100 per barrel as Iranian attacks in the Gulf region raised concerns about potential supply interruptions. This situation has overshadowed an emergency release of strategic oil reserves declared by the International Energy Agency, of which China is not a full member and, consequently, not obliged to take part in collective reserves releases.
Concerns regarding energy security have grown particularly urgent with the Strait of Hormuz, a vital shipping lane responsible for about one-fifth of worldwide crude oil flow, effectively inaccessible during the ongoing conflict. Energy analytics firm Kpler indicated that over half of China’s seaborne crude oil imports last year originated from the Middle East.
Analysts suggest that China's large strategic stockpiles could mitigate the immediate effects of supply interruptions. Kpler approximates that the nation currently holds around 1.2 billion barrels of crude oil in domestic reserves, which equates to roughly 115 days of imports coming by sea. In 2021, Beijing had previously released oil from its strategic reserves via the National Food and Strategic Reserves Administration to combat rising inflation at factory gates.
However, the agency has not yet announced any similar releases in light of the current market upheaval. Guo Jiakun noted earlier this week that China would undertake necessary measures to ensure its energy security as the geopolitical crisis continues to unsettle global oil markets.
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