China halted exports of refined oil products for October in order to boost domestic fuel supplies, according to Reuters, adding to a squeeze in global markets.

Regulators didn’t approve any October shipments ahead of a week-long holiday, the news service said, citing unidentified people briefed on the matter. It wasn’t clear whether permits would be given after the break ended on Wednesday. Shipments to Hong Kong and Macau have been authorised.

The export shutdown risks worsening price spikes for diesel, petrol and jet fuel as wars in the Middle East and between Russia and Ukraine disrupt global oil supplies and reduce refining capacity. Group of Seven nations last week agreed to release 100 million barrels of diesel and crude oil because of shortages, while in the United States President Donald Trump has authorised truckers to use tax-free diesel normally reserved for farmers to help tackle record fuel prices.

China paused fuel exports just days after Trump urged President Xi Jinping “to increase production of refined petroleum products to stabilise global supply”, according to a White House factsheet released following a summit in Washington. The country previously suspended refined exports from March until July after the US and Israel launched attacks on Iran.

Russia has also extended a ban on diesel exports until the end of the month amid damage caused by Ukrainian drones and missiles. Ukraine’s military said last month that it had knocked out more than 45 per cent of Russia’s refining capacity.

Global diesel shortages are likely to persist into next year, according to the US Energy Information Administration, a government agency.

Global oil-market upheavals “make preparedness and cooperation among Asean member states more important than ever”, Kao Kim Hourn, secretary general of the Association of Southeast Asian Nations, said on Wednesday at a meeting of regional energy ministers in Manila. The bloc’s member nations have stepped up efforts to boost fuel-security cooperation following emergency talks in April. The group also intends to achieve a 40 per cent reduction in energy intensity by 2030, while boosting renewables to 30 per cent of primary energy supply and 45 per cent of installed power capacity.

China has tapped oilfields more than 6,000 metres underground as it boosts domestic production through ultra-deep oil and gas drilling. More than 26 million tonnes of oil equivalent have been drawn from wells in PetroChina’s Hade and Fuman oilfields in the resource-rich region of Xinjiang, state broadcaster CCTV said on Monday. Fuman is China’s largest ultra-deep oilfield, with oil and gas resources exceeding 1 billion tonnes, according to PetroChina.

Less cushion: “The market is starting to believe that barrels can keep getting through [the Strait of Hormuz],” said Haris Khurshid, chief investment officer at Karobaar Capital. Still, depleted inventories and tight diesel supplies mean “the physical market has a lot less cushion than the headline export numbers suggest”, he said.

Not this time: The odds that China will bail out the fuel market today look lower than they were back in 2022 – the last time it stepped in to cool sky-high diesel prices. China has an enormous refining network and is currently the only country with significant excess capacity. While US refineries are running hot at around 97 per cent utilisation, Chinese refineries are only at 75 per cent of their max output, data from Vortexa shows. (The Wall Street Journal) Global oil prices have avoided nightmare predictions made after the start of the war on Iran. Still, truckers and farmers are facing record fuel costs.

Fuel buyers are feeling the pinch because of a shortage of capacity at refineries, the plants that turn crude oil into diesel, petroleum and kerosene – the products that consumers and businesses actually buy. Pump prices are also felt keenly by drivers as they hand over their bank cards, as opposed to crude oil prices only seen in the news.

Diesel prices have hit records around the world, even as crude oil supplies from the Persian Gulf rebound towards pre-war levels. The surge is partly because of retaliatory Iranian attacks on refineries in Saudi Arabia, Bahrain, the United Arab Emirates and Kuwait. Refineries in Russia have also been shut following Ukrainian attacks. It will take months, or even years, before all of these plants return to full operation.

China’s diesel production fell by 8.5 per cent in the first eight months of the year, outpacing a 6.8 per cent decline for petrol.

In the US, diesel hit a record high US$6.53 per gallon last month, almost double the price at the start of the year, according to the American Automobile Association. Prices were above US$8 per gallon in California due to high taxes, strict environmental regulations and limited capacity.

Diesel costs have also risen in China, even with government controls in place. The guide price for diesel in Beijing has climbed to 9,655 yuan per metric tonne from 7,450 yuan in January. China has slowed price increases, tapped its world-leading reserves and imposed export controls to help shield its wobbling economy from the effects of surging fuel costs.

Still, the impact of the diesel squeeze reaches beyond service-station forecourts because the fuel powers trucks and farm equipment. Diesel shortages and price increases can easily result in reduced harvests and higher food prices, particularly as the ongoing supply disruptions are coinciding with key farming seasons.

Soybean planting, for instance, should be ramping up in Brazil, the biggest supplier of the crop to China. Instead, farmers in Rio Grande do Sul state, which produces roughly 10 per cent of the nation’s crop, are warning of potential planting delays due to diesel shortages, according to Bloomberg News. Diesel prices in the southern state have risen by about 40 per cent since the start of the Iran war, it said.

The jump in diesel prices is largely due to an increased crack spread – the profit that refiners make from processing crude oil. Brent crude is trading at around US$100 a barrel, down from US$126-plus in April and far below forecasts of US$150 or more. Still, the price is up from US$70 before the war, and there is a risk that any new upheavals in the Middle East could quickly drive prices up again.

Global oil stockpiles were “scarily thin”, Amin Nasser, chief executive of Saudi Aramco, the world’s biggest producer, said at a conference in London on Monday, according to Agence France-Presse.

China, the world’s largest oil importer, is ramping up shipments to replenish its crude supplies. The largest fleet of supertankers in six months is heading to the country, Bloomberg News reported, with 84 vessels capable of carrying 2 million barrels apiece on the way. That’s still short of the 101 ships en route this time last year, the news agency said. Independent refiners have stepped up purchases from Iraq and Qatar to offset the loss of cheap supplies from Iran, according to Reuters.

Longer term, China is paring its reliance on oil imports by investing in renewable energy and electric vehicles, as well boosting coal power production. That has contributed to crude oil imports falling for the last two years even as the economy grows.

Even with the shift towards renewables, diesel retains a key role in the economy, and this is likely to continue for some time. About 60 per cent of new trucks sold in China last year used the fuel, according to the International Council of Clean Transportation.

Diesel prices may rise further around the world as the wars in the Middle East and between Russia and Ukraine drag on. That risks spreading pain throughout the global economy, as higher costs for farmers and truckers will surely lead to higher prices for consumers.