China Allowing Major Exports of Diesel and Gasoline This Month

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(Bloomberg) -- Chinese oil refiners have been granted more permits to export gasoline, diesel and jet fuel this month, according to people familiar with the matter, in a major relaxation of restrictions imposed during the Iran war.

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At least three refiners are being allowed to export this month, said the people, asking not to be named because the information is private. This includes private processor Zhejiang Petroleum & Chemical Co., majority owned by Rongsheng Petrochemical Co., and some state-owned refiners, they said.

Authorities have approved the export of a combined 1.3 million tons of oil products in July, according to traders. That compares with 2.5 million tons of clean-product shipments in February, before the war, official data show. Even prior to the conflict, Beijing maintained strict control of oil-product shipments via a quota system.

China banned fuel exports in early March, in order to safeguard the domestic market from the loss of Persian Gulf oil. By late April, however, energy supplies had stabilized enough for state-owned refiners to begin applying for permits to resume exports. Beijing has been allowing a small amount of shipments to some energy-starved countries since May.

Bloomberg reported last week that China had informed some state refiners that they were now allowed to export fuels to a wider range of countries.

Representatives at Rongsheng Petrochemical didn't respond to an emailed request for comment. China's Ministry of Commerce didn't reply to a fax seeking comment.

There's already been more shipping activity in response. Chinese refiners have been approaching shipowners and brokers this week, searching for available tankers that can carry gasoline, according to a separate group of people familiar with the matter, who asked not to be named as they're not authorized to speak to the media.

The prospect of additional exports is already pressuring regional refining margins, with the spread between Asian gasoline prices against Dubai crude falling to near the lowest level since late March. China is among Asia's largest fuel exporters, and its shipments can have a major impact on refiners across the region, depending on the pace of government quota allocations.

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