China's Latest Move Could Further Raise Global Diesel Prices - OilPrice.com
China's Latest Move Could Further Raise Global Diesel Prices | OilPrice.com
China's Latest Move Could Further Raise Global Diesel Prices
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China may not issue additional fuel export quotas this year, which could further raise global diesel prices amid tight supplies and a still unknown duration of a Russian export ban currently in force.
The Chinese authorities have already told the biggest oil refiners in the world’s top crude oil importer not to rely on more fuel export quotas for the rest of the year, unnamed sources with knowledge of the situation told Bloomberg on Thursday.
So far this year, China has issued three batches of fuel export quotas to its major refiners that are allowed to export diesel, gasoline, and jet fuel.
At the end of August, China issued a larger-than-expected fuel export quota in the third batch of allocations for 2023 as authorities looked to incentivize refiners to sustain economic growth and sell more product abroad at a time when China’s 2023 fuel demand may have peaked.
The third batch of export quotas brought the total 2023 quota volumes above the allowances awarded for the whole of 2022, according to Bloomberg’s estimates.
While a fourth batch of fuel exports quotas may not be in the cards this year, China is set to raise its fuel exports in October as refining margins and international jet fuel demand rise, analysts and industry sources told Reuters earlier this week.
China’s exports of refined petroleum products are set to rise in October compared to September, with gasoline and jet fuel seeing the biggest increases month-over-month, according to industry estimates compiled by Reuters.
Plans for higher October fuel exports could also have been the result of refiners expecting another batch of export allowances, Sun Jianan, an analyst at Energy Aspects, told Reuters.
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So far this year, Chinese refiners have tripled their exports of diesel as export quotas and rising refining margins in Asia proved incentives enough amid tepid domestic demand.
By Charles Kennedy for Oilprice.com
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