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China Export Decision May Swing Market

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Chinese national oil companies (NOCs) have asked the government for up to 15 million tons of additional quotas to export transportation fuels, potentially offering relief to tight global diesel markets but also threatening to collapse refining margins. Markets are on tenterhooks as Beijing mulls its decision. Such a move would mark a significant turnaround from last year, when China slashed products exports to cap refining runs and carbon emissions in one stroke. Chinese refiners — mainly NOCs and private giant Zhejiang Petrochemicals — have so far received 24 million tons of export quotas for 2022, nearly 40% lower than in 2021. The companies have exported 543,000 barrels per day of gasoline, diesel and jet fuel over the first eight months of 2022, or about 50% below the same period in 2021. Diesel exports have crashed hard, averaging 100,000 b/d against about 460,000 b/d a year ago. Without additional quotas, the companies are left with about 7.65 million tons for the last four months of 2022, a paltry volume at a time when China’s oil demand remains sluggish due to Beijing’s zero Covid policy. An additional 15 million tons would bring total quotas for 2022 near 2021 levels — but they would remain far below 2019’s record exports of 55.4 million tons.

Topics:
Diesel/Gasoil, Oil Products, Oil Supply, Policy and Regulation, Ukraine Crisis
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