China Tells Top Refiners to Halt Diesel and Gasoline Exports

China’s government has told the country’s top oil refiners to suspend exports of diesel and gasoline as an escalating conflict in the Persian Gulf disrupts the arrival of crude from one of the world’s largest producing regions.

While the country is only the third-largest supplier of oil products into the region — its vast refining sector primarily serves domestic demand — China’s curbs just six days into a war reflect a scramble across Asia to prioritize domestic needs as the crisis in the Middle East deepens.

Officials from the National Development and Reform Commission, the country’s top economic planner, called for a temporary suspension of refined product shipments that would begin immediately, according to people familiar with the matter. They asked not to be named as the discussions are not public.

At a meeting earlier this week, refiners were told to stop signing new contracts and to negotiate the cancellation of already-agreed shipments, the people said. An exception was made for jet and bunker fuel held in bonded storage and supplies to Hong Kong and Macau, they added.

Read More: How Iran War Is Disrupting Global Oil and Gas Supply

PetroChina Co., Sinopec, CNOOC Ltd., Sinochem Group and private refiner Zhejiang Petrochemical Co. regularly obtain fuel export quotas from the government. None of the five responded to Bloomberg requests for comment. The NDRC also did not immediately respond to queries.

Even in normal times, China does not allow unrestricted exports of refined products like gasoline, diesel and jet fuel. It uses a quota system under which the Ministry of Commerce selects a handful of large refiners and traders.

Petrochemicals — like polyethylene, paraxylene and other chemical feedstocks — generally do not sit under the same standing quota cap.

The quota regime serves multiple goals. It gives Beijing a mechanism to balance domestic supply and demand and enables the government to respond dynamically to market conditions.

Since the outbreak of Russia’s invasion of Ukraine in 2022, which also upended the global energy trade, China’s authorities have frequently scaled back export quotas or delayed allocations, resulting in lower shipments. Some industry analysts have interpreted these moves as an effort to prioritize internal stability and energy security at a time of high geopolitical volatility.

With virtually no oil or fuel making its way out of the Persian Gulf since US and Israeli attacks began at the weekend, refiners from Japan to Indonesia and India have begun cutting back run rates and suspending exports.

China has actively sought to diversify its hydrocarbon supply in recent years, but still receives close to half of its oil imports from the Gulf, including almost all Iran’s shipments.