China is expected to reduce its diesel exports by more than half in November 2026. According to traders, export volumes could fall from 1.8 million tonnes in September to less than 800,000 tonnes. This is due to sharply depleted inventories and lower refinery output. Consequently, Beijing is prioritizing domestic supply—at a time when gas stations in several provinces are already rationing diesel. These cuts come as the global market is already strained, and they could drive international diesel prices even higher. Countries dependent on imports, as well as the transport, agricultural, and industrial sectors, would be particularly affected.
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China’s diesel exports could plummet by more than 55 percent
So far, Chinese refineries have sold only about 500,000 tons of diesel for shipment in November. While further shipments are planned, traders expect the total to remain below 800,000 tons—a decline of at least 56 percent compared to September. As one of Asia’s key flexible suppliers of diesel, China’s significant reduction in exports could have a major impact on the international fuel trade.
The primary reason for this decline is an unusually low level of diesel inventories. By the end of October, commercial stocks had fallen to just 11.1 million tons—the lowest level since records began in 2011, according to the consultancy firm Oilchem. Meanwhile, domestic demand remains stable, even as refineries produce less diesel than anticipated. In several Chinese provinces, truck drivers are already reporting restrictions on the amount of fuel they can purchase at gas stations.
Refineries withhold supplies despite high export profits
It is particularly noteworthy that diesel exports are currently highly profitable for Chinese refineries. Export margins recently reached as much as 800 yuan per ton—equivalent to approximately 120 dollars. Nevertheless, companies are holding back supplies because the fuel is needed domestically. In Shandong province, wholesale prices have already climbed to over 10,000 yuan per ton, the highest level seen since 2018.
This comes even though Beijing had only recently significantly expanded export opportunities, raising the annual export quotas for diesel, gasoline, and kerosene to a total of 42 million tons—an increase of six percent over the previous year. However, refineries appear unable to fully utilize these additional permits due to low inventory levels. China had already temporarily restricted fuel exports in October to secure its national diesel supply.
Reduced diesel exports from China could further drive up global market prices
These announced cutbacks arrive amid an international diesel shortage that has been intensifying for months. According to the International Energy Agency (IEA), combined exports of diesel and gas oil from Russia and the Middle East in September were 1.3 million barrels per day lower than the previous year’s levels. So far, additional supplies from China and the United States have only partially offset these shortfalls. If China now also significantly reduces its diesel exports, the available supply will shrink further—increasing the likelihood of additional price hikes in international trading markets.
Diesel prices are already well above their previous levels. In Europe and the United States, wholesale prices reached approximately 220 dollars per barrel at times during September. At the end of October, gas oil prices in Singapore were still 84 percent above the levels seen before the start of the Iran war. At the same time, Asian imports of refined fuels remained about ten percent below the pre-war average. Further supply cuts could therefore trigger new price increases, even if the supply of crude oil shows a partial recovery.
Germany also faces the prospect of higher diesel prices
This development could also affect Europe, even though Chinese diesel is primarily traded on Asian markets. If less fuel is available there, importers will have to source additional volumes from other suppliers. As a result, Asian and European buyers will increasingly compete for the same available supplies. This competition could drive up import prices—all the more so given that high transport costs are already making trade more expensive. For Germany, this could mean further upward pressure on diesel prices, freight transport costs, and industrial production costs.
In any case, the IEA expects global diesel supplies to remain tight well into 2027. Its member states have therefore decided to accelerate the release of strategic reserves, including more than 20 million barrels of diesel. While such measures can temporarily cap price spikes, they do not address the underlying lack of refinery capacity. Should China’s exports indeed plummet as expected, international competition for available diesel supplies is likely to intensify further. The extent to which this will drive prices even higher, however, will also depend on demand and the availability of alternative supply sources.
Author: Blakout News
Sources: Reuters (05.11.26) – Yahoo Finance (05.11.26) – Shenwan Hongyuan Securities (04.11.26)