China’s ongoing COVID-19 curbs curtailed oil demand resulted in diminishing oil prices. The production of petroleum & other liquids valued at 4.86 million barrels per day in 2019 and remained stagnant in the year 2020 with 4.86 million barrels per day. In the first three quarters of the year, China's imports of crude oil decreased 4.3% year over year, marking the first annual decline for the period since at least 2014. With the declining oil prices, Chinese government has increased the fuel export quota of refined oils to stabilize the weakening of economy.
Based on the data from General Administration of Customs, China's fuel exports between January and September were still down by 27.6%. The drop was caused by a Chinese policy beginning in 2021 to limit excess exports and lower processing rates at refineries due to slack demand amid China's snap Covid lockdowns.
However, Chinese refiners are now pushing the oil outputs, with the government’s new decision on increasing fuel export quota. Diesel exports from China nearly doubled in September compared to the same period last year. The shipment of refined products is expected to be delivered by the end of 2022 or early next year.
Increased Chinese exports are expected to alleviate global fuel shortages, particularly in the United States and Europe; however, Chinese diesel exports are expected to remain in the Asian region.
Increased exports are expected to boost Chinese refiners' profits while offsetting the impact of slower domestic demand due to COVID-19 restrictions.
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