China’s decision to halt exports of diesel, gasoline, and jet fuel until at least the end of March is set to deepen fuel shortages across Asia, compounding the disruption caused by the U.S.-Israel war on Iran. The Strait of Hormuz, a critical shipping route, remains effectively closed, sidelining several Gulf refineries that normally supply the region.
Even before the export ban, Asian refiners were struggling to secure alternative crude shipments. Now, China’s suspension affecting exports valued at $22 billion in 2025 removes a major swing supplier from the market, forcing countries to scramble for alternative sources. Australia, Bangladesh, and the Philippines, in particular, are heavily dependent on Chinese fuel deliveries.
Price spikes and market disruption
The ban has immediately pushed refining margins and fuel prices sharply higher. Diesel derivatives in Asia surged to $150 a barrel on March 17, jet fuel reached $163, and gasoline climbed to $139.80 per barrel, up from pre-war levels of around $79–92.
Analysts warn that remaining Asian exporters lack the spare capacity to offset China’s absence, and Singapore’s benchmark refining margins are likely to keep rising as buyers compete for limited supplies.
Impact on major buyers
China provided roughly a third of Australia’s jet fuel last year and about half of the Philippines’ and Bangladesh’s supply in 2024. Vietnam has already warned airlines to prepare for flight cuts in April due to shortages.
Chinese state firms, including PetroChina and Unipec, remain key suppliers, though deliveries now depend on what is economically feasible given the export restrictions. Both Australia and Bangladesh have publicly sought assurances that existing contracts will be honored, but uncertainty persists.
Further regional export curbs
China is not alone in limiting fuel exports. Thailand has banned most refined fuel exports, while South Korea has capped shipments to last year’s levels and may impose further restrictions. Indian and Japanese refiners are also reportedly reluctant to sell abroad, preferring to meet domestic demand or benefit from higher regional prices. Analysts estimate that these combined measures could force crude run cuts across Asia of up to 6 million barrels per day.
Market adjustments and global rerouting
Despite shortages, some supply flexibility remains. Singapore inventories of light distillates are still 19% above last year, and India is likely to divert more exports to Asia rather than Western markets. U.S. firms, including ExxonMobil, have already chartered shipments of gasoline from the Gulf Coast to Australia, highlighting the logistical and financial strain imposed by regional supply disruptions.
Analysis
China’s export ban underscores the vulnerability of Asia’s energy supply chain amid geopolitical crises. With the Strait of Hormuz closed and regional refiners reducing output, fuel markets are tightening rapidly, driving up costs for transport, industry, and consumers. While alternative supplies from India, the U.S., and other exporters may alleviate shortages in part, the market is likely to remain volatile until shipping routes reopen and regional refining capacity stabilizes.
The ban highlights how global conflicts, combined with unilateral domestic policies, can cascade into broader economic and energy insecurity leaving heavily dependent countries facing difficult choices in sourcing essential fuels.
With information from Reuters.
