Large state-owned oil companies in China submitted applications for permits to export fuel in May, which indicates the possibility of easing the ban introduced at the beginning of the war in the Middle East to protect domestic supplies, “FT” found. The decision could significantly impact global shortages caused by the war and the blockade of the Strait of Hormuz.
China is the world's largest importer of crude oil and main exporter of jet fuel and diesel fuel among others to Australia, Japan, Vietnam, the Philippines and Bangladesh.
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Energy crisis. China is back in the game
Before the outbreak of the war, China exported almost 800,000. barrels of refined fuels per day, according to Kpler data. In April, this value was approximately halved.
According to “FT”, one of the employees of the state oil company said that the government believes that China's fuel demand is “stable” and that it can now return to exports.
A person familiar with China's export plans said that Beijing wants to supply mainly jet fuel to Asian countries, whose resources are currently dangerously low, as well as some gasoline and diesel oil, writes the British daily.
The crisis is knocking on the door of the global economy. Fuel may come from China
Asia has been hit hardest by the current energy crisis because its refineries rely heavily on imports, including from Gulf countries. China has already agreed to sell some of the fuel to countries in the region as part of humanitarian aid.
“Resuming oil exports could significantly alleviate supply shocks in Southeast Asian countries. In Asia, China is the only country that has large-scale export capabilities, Liao Na, founder of GL Consulting, a company that analyzes China's energy and industrial sectors, told the FT.
Strait of Hormuz close to opening?
And Marco Dunand, CEO of Swiss commodities trader Mercuria, told the FT Commodities Global Summit in Lausanne last week that Chinese companies had been “aggressively selling crude oil” over the past two to three weeks, redirecting purchased cargoes to other countries.
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This could mean that Chinese refineries have access to oil from the country's strategic reserves or from Iranian suppliers, or it could be a signal of optimism that the Strait of Hormuz is close to reopening, he suggested.
Chinese oil in the Strait of Hormuz
Before the war in the Middle East, most of them crude oil flowed through the Strait of Hormuz to China. But stocks and alternative supply sources provide Beijing with a buffer. Moreover, Iran allowed tankers from countries it considered friendly, including China, to pass through the strait.
China is the largest importer of crude oil in the world and buys over 80 percent. Iranian oilaccording to Kpler data.
Source: Financial Times
