(Bloomberg) -- China issued its biggest fuel-export quota this year, a highly anticipated allocation that could offer a lifeline to a faltering oil market.
Refiners and traders have been given 15 million tons of new quota, which could possibly be rolled over into the first quarter of next year, according to industry consultant JLC. China’s ministry of commerce didn’t immediately reply to two faxes seeking confirmation of the additional allocation.
China is seeking to export more fuel in an attempt to help revive its economy, which has been hit by Covid lockdowns and a housing slump. Beijing maintains strict control over how much its refiners can ship overseas, and an increase would be a reversal from its focus on curbing emissions.
The latest fuel export quota increases China’s total allocation to 37.25 million tons this year, slightly less than 37.61 million tons issued in 2021, according to JLC. In addition to fuels, Beijing also gave independent refiners in Shandong’s province a small batch of crude import quota, the consultant said.
Refiners will likely need to lift processing to meet the huge gain in exports, providing a much needed demand boost to an oil market being weighed down by global slowdown concerns. However, the potential flood of fuels into Asia has soured the outlook for refining margins for products such as diesel.
Oil reversed losses to climb above $82 a barrel following news of the quota, while profits from turning crude into diesel and jet fuel in Asia declined more than $2 a barrel on Friday.
A quota totaling 13.25 million tons of so-called clean products and 1.75 million tons of low-sulfur fuel oil exports quota were issued to five state refiners, one jet fuel supplier and a private refiner, JLC said.
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