China's gasoline and diesel inventories have slumped to seven-year lows, and consultancy GL Consulting said refiners may cut fuel exports in October to prioritize domestic supply. A pullback would tighten a global fuel market already strained by disruptions in the Middle East and Russia.
China's refiners could pull back on fuel exports in October as domestic gasoline and diesel stocks run critically low, threatening to squeeze an already tight global fuel market further.
August exports surged past pre-war levels
China's fuel exports rebounded in August. Refiners shipped 6.01 million tons of petroleum products, up 12.7% from a year earlier, after Beijing lifted mid-July restrictions that had been in place at the peak of the Strait of Hormuz blockage. The total volume of Chinese fuel exports exceeded pre-war levels last month, and jet fuel exports hit an all-time high. Overseas shipments are set to stay strong in September as well.
Seven-year-low stocks could force a reversal
But October could look different. Gasoline and diesel inventories have fallen to a seven-year low, GL Consulting, a consultancy owned by MySteel, said this week. China has not yet announced its fuel export plans for October, but with domestic supply already constrained and internal demand strengthening, GL Consulting said "refiners are likely to prioritise the domestic market." That would redirect barrels that would otherwise have been shipped overseas back into China's own balance.
Chinese fuel inventories are tight and likely to stay that way through the end of October, the consultancy said. The recent export surge pulled additional barrels out of the domestic market from July through September, even as peak summer travel supported gasoline demand and autumn harvesting alongside pre-season restocking underpinned diesel consumption. GL Consulting framed the squeeze as a supply-demand balance issue rather than a simple inventory story, with refinery availability and export flows likely to determine how long it lasts.
A tighter China would deepen the global fuel crunch
Lower Chinese exports would add to a global fuel crunch already driven by disruptions in the Middle East and Russia. That tightening has pushed refining margins and retail fuel prices to record highs in several markets, including the United States.
Source: Oilprice.com
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