Iran war: China stops exporting petrol, diesel and jet fuel, Australia bears the brunt
Friday, 13 March 2026
China has ordered an immediate ban on refined fuel exports in March, a move thought to pre-empt a potential domestic fuel shortage caused by the US-Israeli war on Iran, according to Reuters.
The Chinese move does not directly impact New Zealand, which sources most of its jet fuel from refineries in Singapore, South Korea and Japan. Singapore acts as a major global refining hub, importing most of its raw crude oil from the Middle East ‒specifically the United Arab Emirates, Qatar, Saudi Arabia, and Kuwait ‒ to process, while exporting refined products back into countries in the Pacific Rim.
That is, in itself, a problem given issues with transit through the Strait of Hormuz. But it also means many of those who rely on Chinese fuel will have to switch to those that also supply New Zealand, leading to a competitive and expensive marketplace for what is likely to be an increasingly precious commodity.
Currently, levels are sufficient and in line with what the country needs to hold as part of its international obligations.
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Australia is the worst affected in Australasia. The country imports between 85% and 90% of all transport fuels, mainly from China, and loads take between 20 and 25 days to reach the country, raising the spectre of a fuel shortage within the month.
A story in the AFR this afternoon quotes an email by Aldric Chew, the head of oil pricing in Asia Pacific at data service Argus, to traders, citing Chinese officials’ instructions not to load cargoes that had not cleared customs by March 11.
The ban, issued by the National Development and Reform Commission (NDRC), includes shipments of gasoline, diesel and aviation fuel, the sources said.
As war intensified in the Middle East, Chinese refiners had planned to increase exports of its large fuel stockpile to capitalise on high global margins. The country has over 1.2 billion barrels in its Strategic Petroleum Reserve.
But recently China asked its state-owned energy exporters to find ways to cancel outgoing cargoes and suspend export contracts, before now banning outright the export of the commodity to protect its domestic industries.
Meanwhile, margins on refined fuels have skyrocketed to three-year highs, and international airfares are soaring. Air New Zealand has already increasing its long-haul economy fares by $90, and carriers like Vietnam Airlines and others are warning operating costs could rise as high as 60% if prices remain elevated.