The Chinese government has told the country’s major oil refiners not to expect any more fuel export quotas this year, according to people with knowledge of the matter.
The state-owned processors and fuel suppliers understand there won’t be any more allowances coming after a release this month took this year’s total above that in 2022, said the people who asked not to be named because they aren’t authorized to speak to the media.
China’s refining system is mainly geared to supply the domestic market and Beijing controls the amount of fuel that can be exported. While it’s widely thought the quotas have been increased recently to aid economic growth, authorities are also mindful of environmental concerns and not breaching emissions targets.
Beijing has granted around 40 million tons of fuel export quotas so far this year. That compares with 37.3 million tons in 2022.
Read More: China’s Refiners Turn to Fast-Expanding Fuel Exports for Growth
Not issuing any more allowances is potentially bullish for already elevated global diesel prices, especially at a time when markets are also weighing the possible loss of Russian seaborne supplies of the industrial and transport fuel.
Another round of quota issuance is unlikely this year, particularly after some 800,000 tons of low-sulfur-fuel oil allocations from the last batch was reassigned to transport fuels, said Ding Xu, an analyst at industry consultant OilChem. China will probably export 3.8 million tons of diesel and 2.9 million tons of gasoline in the fourth quarter, he said.
Argus Media reported Wednesday that China will not issue another batch of fuel export quota this year, citing unnamed officials who attended a meeting between the National Development and Reform Commission and state refiners on that day.
— With assistance by Elizabeth Low, Sarah Chen, and Alfred Cang
