China has asked firms to stop signing new contracts for the export of refined fuel and to cancel any shipments that have already been made, due to the escalating conflict in the Middle East.

People said that the call did not cover jet fuel for international flights or bunkering in bonded containers, nor supplies to Hong Kong and Macau.

The National Development and Reform Commission didn't immediately respond to an inquiry for comment.

The tight fuel supply in Asia will be exacerbated by lower exports from China, Asia's largest fuel exporter. This will push up the refining margins.

LSEG?pricing figures showed that diesel's processing margins hovered at three-year highs around $49 a barrel, while jet fuel cracked was more than $55 a barrel.

Sources said that the new government communication is expected to reduce exports from April, as most of the march export program has been fixed, and it's hard to recall the cargoes.

Multiple sources reported that March exports of gasoline and diesel combined would remain stable compared to earlier estimates of around 3 million metric tons. This was because companies were able to cash in on robust margins from Asia.

LSEG's ship tracking data shows that 70,000 tons jet fuel, 35 000 tons diesel and 35,000 tonnes gasoline were shipped this month.

China's refined fuel exports are managed by a quota-based system that balances the fundamentals of supply and demand in its local market. The first batch of 2026 quotas was little changed from last year, at 19 million tonnes.

On Thursday, three regional buyers of China origin cargoes said they would continue to receive their March deliveries in accordance with earlier loading schedules.

Two Chinese refineries, the Sinopec-operated Fujian Refinery and Zhejiang Phytochemical Corp, have reduced their throughput in this month. More plants will likely follow suit as the Middle East conflict continues to disrupt crude oil flow, sending prices soaring.

(source: Reuters)