China Halts Fuel Exports Again as Domestic Stocks Hit Seven-Year Lows

Chinese refiners have suspended exports of gasoline, diesel and jet fuel to all destinations other than Hong Kong and Macau for October 2026. Four people briefed on the matter told Reuters on October 1 that the pause applies until further notice from Beijing. The measure concerns refined oil products and not crude oil, which China imports in very large volumes and does not export in significant quantities.

No formal ban has been published. China manages fuel exports through monthly approvals, and the week-long National Day holiday began on October 1 without major refiners receiving a green light to ship products outside Hong Kong and Macau during the month. On September 30, state-owned PetroChina cancelled a handful of gasoline and jet fuel cargoes planned for October, most of which it had agreed to sell in the previous two weeks. Zhejiang Petrochemical, a privately controlled company that runs one of the largest refineries in the country at Zhoushan, did not schedule any product shipments for the holiday week. PetroChina, Zhejiang Petrochemical and the National Development and Reform Commission did not respond to requests for comment during the holiday.

This is the second time in 2026 that China has closed its fuel export window. The war launched by the United States and Israel against Iran in late February disrupted crude flows from the Middle East, and in early March Beijing told its refiners to stop signing new export contracts and to cancel shipments already agreed. Bonded jet fuel and ship fuel, along with deliveries to Hong Kong and Macau, were exempted. The curbs were relaxed from July and exports recovered during the third quarter. Chinese customs data showed combined gasoline, diesel and jet fuel exports of 4.58 million metric tons in August. Trade estimates for September point to about 1.4 million tons of diesel, 500,000 tons of gasoline and at least 2 million tons of jet fuel, including bonded volumes for Hong Kong and Macau, which represents a decline from August.

The main reason given by trade sources is the low level of domestic fuel stocks, combined with uncertainty over crude supply. Beijing has made exports conditional on local inventories returning to pre-war levels. According to data firm Kpler, commercial diesel stocks are about 20 million barrels below that threshold and gasoline stocks are about 9 million barrels short. GL Consulting, a Chinese consultancy, said in late September that gasoline and diesel inventories had dropped to seven-year lows. Michal Meidan of the Oxford Institute for Energy Studies said the decision shows that domestic supply security remains the priority of the government ahead of international markets, even though refiners would like to benefit from very high export margins.

The loss of Iranian crude is an indirect but real part of the picture. China bought an average of 1.4 million barrels per day (bpd) of Iranian oil in 2025, more than 80% of the volumes Iran shipped, and this crude represented roughly 13% of Chinese seaborne imports before the war. Most of it went to independent refiners in Shandong province, often called teapots, which account for about a fifth of national refining capacity and rely on discounted sanctioned barrels. The United States announced a naval blockade of Iranian ports on April 13, eased it temporarily in June and re-imposed it on July 13. Tanker trackers recorded no crude loadings at Iranian terminals in September. Iran kept supplying China for a while from oil stored on ships in Asian waters, but those deliveries fell to about 475,000 bpd in September and stopped arriving from September 26, according to an Oilprice.com analysis of shipping data.

Deprived of their cheapest feedstock, Shandong refiners have turned to Brazil, Iraq, Guyana and Russia at much higher prices, and some have reduced processing. Crude arrivals at the port of Dongying, which serves 32 independent plants, fell to about 220,000 bpd in September from an average of 330,000 bpd in 2025. In late September, Beijing issued an additional 28.05 million tons of crude import quotas to encourage independent refiners to raise output. Total seaborne crude imports reached about 7.5 million bpd in September, still far below the 11.5 million bpd recorded in February. No official statement ties the export pause to Iranian oil, and analysts point first to low fuel stocks. The shortage of Iranian barrels nevertheless reduces the crude available to Chinese refineries and makes those stocks harder to rebuild.

Markets reacted immediately. The December Brent contract, which had settled at $98.03 per barrel on September 30, closed at $102.31 on October 1 and traded near $102.25 on the morning of October 2. Reports that Washington was sending additional forces to the Middle East also supported prices on October 1. In Asia, diesel refining margins climbed to roughly $76 per barrel, the highest in a week, and the gasoline margin reached a record $50.53 per barrel over Brent.

Singapore, Malaysia, Australia, Vietnam, Bangladesh and the Philippines were among the main destinations for Chinese fuel in September, according to Kpler and LSEG data. Bangladesh buys up to a third of its refined fuel imports from Chinese state traders. A senior energy official there said no notice had been received from the suppliers and that fuel could be sourced elsewhere if needed. During the March ban, Australia and Vietnam faced tight jet fuel supply and Qantas raised fares. South Korean refiners could cover part of the gap this time, although their spot volumes are limited by long-term contracts.

The pause comes at a difficult moment for the global fuel market. Russia has banned diesel exports through October 31 after Ukrainian attacks on its refineries, and shipments of refined products from the Gulf remain around half of pre-war levels. Hamad Hussain of Capital Economics noted that the Chinese restrictions weigh less than the loss of Russian and Middle Eastern supply, but that they add stress to a market that is already severely constrained. In the United States, diesel has reached a record of about $6.50 per gallon, roughly 70% above pre-war levels.

The decision followed a visit by President Xi Jinping to Washington less than a week earlier, during which President Donald Trump asked him to help stabilise global fuel supplies. US Energy Secretary Chris Wright said the world has lost diesel exports from Russia, the Middle East and China. The Trump administration has told Germany and France to draw down emergency diesel reserves or face a possible US diesel export ban, and one source said Washington wants Europe to release 120 million barrels over six months. The European Union energy taskforce scheduled a call for October 2 to discuss a possible release, and no decision had been announced at the time of writing.

The next milestone is October 7, when the holiday ends. Sources said it is unclear whether Beijing will then allow exports to resume, and that the decision will depend on domestic inventories and refinery output. Industry participants do not expect the global diesel shortage to ease before 2027. Importers that rely on Chinese cargoes therefore face uncertain availability for the rest of October.