CHINA CUTS OCTOBER FUEL EXPORTS AND ASIA IS LEFT ASKING WHETHER INDIA CAN PLUG THE HOLE

Chinese refiners have suspended fuel exports for October, and the barrels Asia usually takes from them are not booked.

Four people briefed on the matter told Reuters on 1 October that Beijing had not given major refiners clearance to ship oil products in October to anywhere except Hong Kong and Macau. The holiday week that began that day runs to 7 October. The sources said it was not clear whether permits would resume after that. The decision, they said, would depend on domestic inventories and refinery output.

State major PetroChina cancelled a handful of gasoline and jet fuel cargoes planned for October, three of the sources said. Most of those deals had been committed in the previous two weeks. Privately controlled Zhejiang Petrochemical did not schedule product shipments during the holiday week, a fourth source said.

This is a pause on new clearance, not a published decree that every barrel has stopped. Shipments to places with close ties to Beijing, including Cambodia, have continued, the New York Times reported. Energy Aspects analyst Ronan Reed estimated the curbs would cut China’s refined-product exports to about 480,000 barrels a day in October, from an earlier forecast of 750,000, and that November could fall toward 300,000 if leftover September quotas are used up and Beijing does not change course. Sinopec had already told industry experts it would curb production and exports in October after a directive from the National Development and Reform Commission, the Times reported.

Beijing’s condition, trade sources told Reuters, is that local stocks return to pre-war levels. Zameer Yusof, senior manager for clean oil products at Kpler, said commercial gasoil and diesel inventories were about 20 million barrels below that line, and gasoline about 9 million barrels short. “A pause on those products was likely,” he said. China had already halted exports in the spring and early summer during the Strait of Hormuz disruption, then loosened the rules in mid-July. August exports recovered to 6.01 million tonnes, up 12.7 percent on the year. September shipments were about 1.4 million tonnes of diesel, 500,000 tonnes of petrol and at least 2 million tonnes of jet fuel, including bonded cargoes to Hong Kong and Macau.

Asian diesel spreads for October and November rose to a two-week high as traders priced in the missing Chinese barrels. UBS analyst Giovanni Staunovo said the largest impact would be in middle distillates, where diesel is already tight. KCM Trade’s Tim Waterer said gasoline and jet looked most exposed because PetroChina had cancelled so much of those grades, with diesel hit as buyers hunt replacements.

The replacement argument is India’s, and it is an argument, not a booking. In a Reuters Open Interest column on 5 October, Gavin Maguire wrote that India may be best placed to fill the gap, citing rebounding crude imports and recent tax cuts on fuel exports. Indian government data cited in the piece put the system at 23 refineries and about 5.6 million barrels a day of crude capacity, the world’s fourth largest, against more than 18 million in China and the United States and about 6.7 million in Russia. Kpler figures in the same column showed India shipping about 47 million tonnes of diesel, gasoline and jet fuel in 2025, against China’s 25.4 million. The catch is this year. India’s combined exports of those three fuels in the first nine months of 2026 are down about 23 percent, nearly 8 million tonnes, from a year earlier. A fire at an Indian refinery this week also led its owner to hold back some diesel exports for the home market.

China’s suspension may lift after 7 October. Until Beijing says so, the market is treating a holiday pause as a supply risk, and treating India as the swing supplier that has not yet swung.