China may restrict fuel exports as inventories hit multiyear lows

China's gasoline and diesel inventories are falling fast, raising the prospect that Beijing will once again restrict fuel exports just months after lifting wartime controls that froze shipments earlier this year.

Gasoline stockpiles at Chinese state-owned fuel suppliers dropped 2.9% last week to their lowest level since 2022, while diesel holdings declined 2.4% to a 15-month low, according to data from JLC International, a Chinese commodity market research firm, as reported by Bloomberg.bloomberg+1

Export Curbs Loom Over Q4

"With the domestic market tightening, we see an increasing risk that Beijing could restrict monthly clean product exports to around 1.2 million tons in the fourth quarter," Jianan Sun, an analyst at Energy Aspects in London, told Bloomberg. That would represent a steep cut from recent levels — Chinese refiners were expected to export more than 4 million metric tons of gasoline, diesel, and jet fuel in September alone, according to Reuters.reuters+1

Beijing has also instructed refiners to reduce petrochemical yields and prioritize transport fuel production as crude supplies tighten, according to Quantum Commodity Intelligence.qcintel

A Familiar Playbook

China deployed the same strategy earlier this year when the U.S.-Iran conflict disrupted global energy flows. In early March, Beijing ordered energy companies to suspend new fuel export contracts and cancel already-arranged shipments abroad, covering all gasoline, diesel, and jet fuel cargoes that had not cleared customs as of March 11. The restrictions pushed domestic inventories to elevated levels before authorities began relaxing controls in April. By July, combined exports of gasoline, diesel, and jet fuel had recovered to around 3 million metric tons per month, and shipments climbed further to 2.55 million tons of clean products in July, according to Chinese customs data cited by Bloomberg.oilprice+4

Global Diesel Market at Risk

The potential curbs come as the global fuel market faces mounting strain. The International Energy Agency's September oil market report projected world oil supply at 100.7 million barrels per day in 2026, down 5.7 million barrels per day year-on-year, with a full recovery in Middle East output deferred until 2027. Chinese independent refiners have already lost access to their preferred Iranian crude due to a U.S. blockade, pushing up premiums for alternative barrels from Africa and Latin America.iea+1

If Beijing moves to limit exports again, the impact would ripple across Asia, where buyers have come to depend on Chinese fuel shipments to offset supply disruptions from the Middle East. As OilPrice.com noted, the global diesel market currently faces shortages "that cannot be resolved by simply diversifying suppliers because there are no suppliers to diversify with — and demand is on a seasonal climb."oilprice