Oil Jumps 4pc as China Suspends Fuel Exports, US Sends Third Carrier to Middle East
Oil Jumps 4pc as China Suspends Fuel Exports, US Sends Third Carrier to Middle East
Oil prices jumped on Thursday and settled up more than $4 a barrel, after a report said the US was sending more troops and carriers to the Middle East and China suspended oil products exports, stoking fears that global fuel shortages could worsen. The China fuel exports halt landed in a market already short of diesel and refined products, and traders reacted fast.
The new front-month December Brent crude futures contract settled at $102.31 a barrel, up 4.37 per cent or $4.28. US West Texas Intermediate crude futures finished at $92.87 a barrel, up 2.71pc, or $2.45.
Why the China fuel exports halt rattled markets
A Wall Street Journal report said the US was sending a third aircraft carrier and up to 10,000 more troops to the Middle East as President Donald Trump weighed resuming strikes on Iran after the US midterm elections. Trump told reporters at the White House that he was weighing his options on Iran.
“Now I have to make a decision. They’ll either sign a very fair deal, or they won’t exist any longer,” he said, according to Reuters.
The comments, coupled with China’s suspension of fuel exports, produced a volatile trading session. Oil prices fell 1pc early but reversed course after Reuters reported that Chinese refiners had suspended exports of oil products beyond Hong Kong and Macau until further notice, citing four people familiar with the matter.
PetroChina also cancelled several gasoline and jet-fuel cargoes scheduled for October, the reporting said, a sign that Chinese refiners are prioritising domestic inventories after recent declines in the country’s crude and fuel stocks.
Diesel remains the tightest link
While crude supplies continue to reach the market, diesel and other refined products remain in short supply following damage to refinery infrastructure in the Gulf and Russia. Russia, a top exporter of diesel, has banned fuel exports through October.
“The Chinese export ban suggests concerns about domestic product availability,” UBS analyst Giovanni Staunovo said, adding that it remains to be seen whether the measure will support higher crude imports after recent drawdowns in Chinese crude and fuel stocks.
European diesel refining margins stood near record levels in recent weeks, and inventories in major trading hubs, including Singapore, have stayed tight. With refining capacity in the region not fully recovered, the products the market needs most remain scarce even as crude keeps flowing.
Frequently asked questions
How much did oil prices rise?
December Brent settled at $102.31 a barrel, up $4.28 or 4.37pc, while US WTI finished at $92.87, up $2.45 or 2.71pc.
What did China suspend?
Chinese refiners suspended exports of oil products to destinations beyond Hong Kong and Macau until further notice, according to Reuters, which cited four people familiar with the matter.
Why is the US sending more forces to the Middle East?
The Wall Street Journal reported a third aircraft carrier and up to 10,000 more troops were being sent as President Trump weighed resuming strikes on Iran after the US midterm elections.
Why are fuel markets so tight?
Diesel and refined products are in short supply after damage to refinery infrastructure in the Gulf and Russia, with Russia banning fuel exports through October and European diesel margins near record highs.
