China's NDRC asks oil companies to suspend April gasoline, gasoil exports: sources

China's National Development and Reform Commission has asked oil companies holding export quotas to suspend April gasoline and gasoil exports to ensure plentiful domestic supplies, as soaring international oil prices in the wake of the Russia-Ukraine war stoke inflation worries, several sources with knowledge of the matter said March 9.

The request by the country's top economic planning body is not entirely binding, but quota holders usually comply with the NDRC. Oil firms can appeal to the commission to restore exports when the market demand and supply balance change.

"Oil companies have received notices from NDRC about suspending gasoline, gasoil exports next month, but jet fuel and bunker fuel oil supplies in China's international airports and bonded ports should run as normal," a Beijing-based source at one of the companies' head offices told S&P Global Commodity Insights.

China was clearly going to cut its oil product exports in April, a Singapore-based analyst said.

"But it is too early to say if outflows will dry out in April, as the war can change the market anytime and China will still have time to adjust its plan," the analyst said.

The country's consumer price index increased 0.6% month on month and 0.9% year on year in February, according to the National Bureau of Statistics March 9. China has set a 2022 CPI target of below 3%.

Sources at state-owned refiners Sinopec and PetroChina said they had not finalized April exports, as they were yet to receive guidance from their respective head offices.

PetroChina's Guangxi Petrochemical plans to continue jet fuel exports in April, the sources said.

Rising crude prices amid the war have forced Chinese refineries to cut throughput because of eroding margins and a shortage of feedstocks, raising expectations that the government would limit oil products exports, S&P Global reported earlier.

At 10:32 am Singapore time (0232 GMT) March 9, the May ICE Brent futures contract was up $3.00/b (2.34%) from the previous close at $130.98/b, while the April NYMEX light sweet crude contract rose $2.10/b (1.70%) to $125.80/b.

At least three independent refineries with a combined capacity of 187,000 b/d in Shandong had cut their crude throughputs as of March 8, due to weakening margins, refinery sources said.

The 60,000 b/d independent Chengda New Energy had shut its crude distillation unit due to refining losses, company sources said.

China is aiming to boost domestic output, increase energy reserves, and stabilize domestic prices as oil prices surge, Lian Weiliang, vice director of National Development and Reform Commission, said during the country's annual legislative session March 7.

Analysts said boosting oil product reserves by cutting exports was a more sensible move than lifting crude inventories by purchasing cargoes from the international market at sky-high prices.

Beijing set a target to cut its oil products exports in 2021, and in December slashed 2022 gasoline, gasoil, and jet fuel export quota allocation in the first batch by 56% year on year.

The country's oil product exports, comprising gasoline, gasoil, jet fuel and fuel oil, slumped 33% year on year to 7.3 million mt over January-February, data from the General Administration of Customs showed.