China has directed its largest refining complexes to halt exports of diesel and gasoline, triggering immediate market concerns over global supply constraints. The move is expected to tighten distillate markets and elevate crude and refined product prices.
- China’s top refiners—Sinopec, CNOOC, CNPC—halted diesel and gasoline exports effective March 1, 2026
- Net exports of gasoline and diesel dropped to near zero in Q1 2026, down from 1.2 million bpd in 2025
- HO=F rose 8.2%, CL=F gained 4.6%, and BZ=F reached $89.40 per barrel post-announcement
- Singapore diesel spot prices rose 12% week-on-week amid increased regional competition
- Domestic demand in China surged 14% for gasoline and 11% for diesel year-on-year in February 2026
- VIX index climbed to 23.7, signaling rising market volatility
China’s energy authorities have mandated that its top three refiners—Sinopec, CNOOC, and China National Petroleum Corporation (CNPC)—immediately suspend exports of diesel and gasoline, effective March 1, 2026. The directive marks a strategic shift in domestic energy policy aimed at prioritizing local fuel supply amid rising internal demand and seasonal heating needs. The decision follows a sharp rise in domestic fuel consumption, with gasoline demand in February 2026 up 14% year-on-year and diesel demand increasing by 11%, driven by industrial activity and transportation. As a result, the country’s net export volumes of gasoline and diesel—previously averaging 1.2 million barrels per day in 2025—have been reduced to near zero in the first two months of 2026. This abrupt supply withdrawal is projected to tighten global distillate markets, with HO=F (ULSD futures) rising 8.2% in early trading and CL=F (WTI crude) gaining 4.6% over the same period. The BZ=F (Brent crude) benchmark also climbed to $89.40 per barrel, its highest level since late 2024. The VIX index spiked to 23.7, reflecting heightened market volatility amid uncertainty over global trade flows. Refining hubs in India, Southeast Asia, and the Middle East are already seeing increased competition for imported fuel, with spot prices for diesel in Singapore rising by 12% week-on-week. European and U.S. refiners may face reduced export opportunities, while import-dependent regions such as the Mediterranean and parts of Latin America could experience tighter supplies and higher costs.