China eases fuel export ban with 2.7 mln t August quota amid global crunch
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China has partially lifted its fuel export ban, allocating 2.7 million tons of oil products for export in August, Reuters reported citing unnamed sources. The easing follows the build-up of record domestic crude stockpiles and comes as a global fuel shortage deepens due to the Strait of Hormuz closure.
August Export Allocation
China's National Development and Reform Commission has allowed state refiners to ship 2.7 million tons of gasoline, diesel and jet fuel abroad in August, excluding Hong Kong and Macau, sources told Reuters. If exporters fail to secure deals for the full volume, they can roll the remainder to September. The quota marks a significant increase from the 800,000 tons reportedly allowed in July. The temporary easing reverses a near-total ban imposed in late June after the Strait of Hormuz conflict erupted.
Global Supply Crunch
The initial export ban came days after the conflict closed the Strait of Hormuz, a chokepoint for one-fifth of global oil transit. China ordered energy firms to suspend new export contracts and cancel existing ones as fuel markets tightened worldwide. The closure disrupted diesel and jet fuel flows, with ship fuel oil exports from China surging 18% year-on-year in June to 577,000 barrels per day, the highest since January 2026. Asian buyers scrambled for supply, with some volumes still allowed to Southeast Asian nations.
Record Crude Reserves
China's decision was underpinned by crude oil stockpiles of over one billion barrels, built before the Hormuz conflict. Domestic fuel inventories swelled as a result, prompting an earlier easing of export curbs in April. Fuel oil exports hit multi-month highs in June as refiners processed stockpiled crude into products for a fuel-hungry global market. The strategy allows Beijing to manage domestic oversupply while addressing international shortages.
What's Next
The August quota is set to expire at month's end, but the rollover provision may pave the way for a September extension. It remains unclear whether China will sustain eased exports if the Strait of Hormuz remains closed and global prices continue to rise.
2 sources
China eases fuel export ban with 2.7 mln t August quota amid global crunch
