China's oil demand could soon see a boost from a fresh batch of fuel export quotas allocated to refiners as Beijing is said to be eager to revive economic activity.
Refiners have applied for 15 million tons in new export quotas for fuels, including diesel and gasoline, Bloomberg reported on Thursday, citing sources with knowledge of the matter. If Chinese authorities decide to grant the asked quota volumes, the total Chinese quota so far this year would rise to the level of the whole of 2021 and would mark a U-turn in export quota policies of recent months.
With the previous batch in July, China's fuel export quotas for refiners so far this year were 39 percent lower than the collective quotas this time last year.
China started this year by considerably reducing the allowances for fuel exports in the first export quota batch for 2022, signaling its intention to limit fuel sales abroad and curb excessive refinery output.
According to Reuters sources, cited by CN Wire, on Thursday China issued a new batch of refined fuel export quotas for this year at 1.5 million tons.
On Wednesday, trading sources also told Reuters that China had issued a fourth batch of export allowances for very-low sulfur fuel oil (VLSFO) of 2.75 million tons. Thus, the VLSFO quota is now at 15 million tons so far this year, exceeding the total quotas for 2021 by one-quarter.
The possible ramp-up of fuel export allowances for 2022 could be one of the ways in which China looks to revive its economic activity, Bloomberg's sources said today.
Higher export quotas could mean potentially higher Chinese oil imports, which would be supportive of demand and oil prices. Just yesterday, the International Energy Agency (IEA) said it expects China's oil demand to fall for the first time in more than three decades.
On the other hand, higher Chinese fuel exports could ease the tight oil product markets.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More