China Keeps Fuel Production High as Iran War Threatens Oil Shipments

Bloomberg

Sunday, July 12, 2026 7:37 | 2 minutes read

China has instructed some of its major refineries to maintain high fuel production levels, according to people familiar with the matter, in an effort to protect the domestic market from any potential shortage as military strikes in the Arabian Gulf again threaten oil shipments.

During the early stages of the Iran war, concerns about domestic fuel availability led Beijing to cut sales of gasoline, diesel, and jet fuel to foreign customers, but it later eased those restrictions, including issuing additional quotas for oil product exports earlier this month.

Fri, 10 2026

Iran War Threatens Oil Market Again

Renewed violence, along with the US decision to revoke the waiver that allowed the sale of Iranian oil, threatens the temporary peace agreement between Washington and Tehran and heightens Beijing's concerns about possible new disruptions to crude and fuel supplies, according to sources who requested anonymity because the discussions are not public.

The people added that authorities have asked at least two major refineries to maintain or increase current operating rates, despite rising gasoline and diesel inventories in China and a continued structural slowdown in consumption of these two products.

Beijing had been imposing strict controls on oil product shipments abroad through an export quota system even before the conflict erupted. One person said the export quotas allocated for July would not see any adjustment.

Raising refinery operating rates is expected to increase pressure on Asian refining margins, as the price spread between Asian gasoline and Dubai crude has fallen to its lowest since late March.

China's National Development and Reform Commission, responsible for economic planning, did not respond to Bloomberg inquiries sent outside official working hours.

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