China has quietly instructed its major oil refiners to stop signing new overseas contracts for gasoline and diesel shipments as global oil markets tighten amid the escalating conflict involving Iran, according to several people familiar with the directive.
Industry sources said authorities also encouraged refiners to try to cancel previously arranged shipments where possible, signaling growing concern about fuel supply and refinery output as the Middle East crisis disrupts crude oil flows.
The measure, however, does not apply to jet fuel used for international flight refueling, bonded bunkering services, or fuel deliveries to Hong Kong and Macau, according to industry and trade sources.
China’s top economic planner, the National Development and Reform Commission, did not respond to a request for comment on the guidance.
The decision could have a ripple effect across Asia’s energy markets. China is one of the region’s largest exporters of refined fuels, and any reduction in shipments is expected to further tighten supply and push refining margins higher.
Energy market data from LSEG showed diesel processing margins hovering near three-year highs of about $49 per barrel on Thursday. Margins for jet fuel were even stronger, exceeding $55 per barrel, reflecting growing strain in the fuel supply chain.
Despite the new directive, most fuel exports scheduled for March are unlikely to be affected. Industry sources said many shipments had already been finalized and cargoes were difficult to recall once booked.
As a result, exports of gasoline, diesel and jet fuel combined are still expected to reach around 3.8 million metric tons in March, roughly in line with earlier industry forecasts.
Ship-tracking data compiled by LSEG shows that, so far this month, China has exported about:
- 70,000 tons of jet fuel (551,600 barrels)
- 35,000 tons of diesel (260,750 barrels)
- 35,000 tons of gasoline (295,750 barrels)
Regional buyers confirmed that their March shipments remain on schedule.
Analysts and traders say the export restrictions will likely become more visible starting in April, when refiners adjust production plans and contract volumes under the new guidance.
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China regulates fuel exports through a quota system designed to balance domestic supply with international demand. The government issued its first export quota for 2026 at about 19 million tons, largely unchanged from the previous year.
At the same time, some refineries have already begun reducing operations.
Sources said Zhejiang Petrochemical Corp, one of China’s largest private refiners, and the Sinopec-operated Fujian refinery have lowered processing rates this month. More facilities may follow if crude oil supply disruptions persist due to tensions in the Middle East.
The tightening export policy coincides with a sharp rise in domestic fuel prices in China.
Wholesale diesel prices jumped 13.5% to 7,276 yuan ($1,055.18) per ton between February 28 and March 4, according to data from consultancy JLC.
Meanwhile, ex-plant prices for 92-octane gasoline climbed 11% to 8,208 yuan per ton compared with the previous week, according to figures posted by independent refiner Shandong Chambroad Petrochemical.
Traders say the price surge has sparked a wave of stockpiling among wholesalers, even though end-user demand has remained relatively steady.
“We’re busy pushing up prices, hoping to maximise our profits during this period,” said a trader with a separate independent plant.
While some refineries are slowing output, processing activity among smaller independent plants has increased.
In Shandong province, home to China’s so-called “teapot” refineries, crude processing rates climbed 1.98 percentage points week-on-week to 60.91% as of Wednesday, according to consultancy SCI.
The conflicting signals highlight the delicate balancing act facing China’s energy sector as geopolitical tensions reshape global oil supply and pricing.
China remains the world’s largest crude oil importer, meaning any domestic policy changes affecting refining and fuel exports can quickly ripple through regional energy markets.
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