Economy
Oil Jumps as China Suspends Fuel Exports, US Boosts Middle East Presence
By Adedapo Adesanya
Oil was up by more than $4 a barrel as China suspended oil products exports, stoking fears that global fuel shortages could worsen, while the United States reportedly sent more troops and carriers to the Middle East.
Brent crude futures settled at $102.31 a barrel after it chalked up 4.37 per cent or $4.28, and US West Texas Intermediate (WTI) crude futures finished at $92.87 a barrel, up 2.71 per cent or $2.45.
PetroChina, the Chinese state major, has cancelled some petroleum and jet fuel cargoes that were expected to be shipped in October, according to Reuters.
China suspended fuel exports previously as it looked to protect its domestic fuel supply amid the Strait of Hormuz crisis. As of the middle of July, Chinese authorities removed most restrictions on fuel exports, allowing refiners to boost overseas shipments and ease the fuel crunch in Asia.
Fuel exports from China soared between July and September, but it appears new restrictions are in place in October as China did not authorise fuel exports beyond Hong Kong and Macau ahead of the week-long Golden Week public holiday starting on October 1. It is not clear if China would authorise any fuel exports after the holiday week ends on October 7.
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.
Global diesel inventories are already tight after Russia, a top exporter of the fuel, banned exports through October. President Vladimir Putin said the country will not supply diesel to global energy markets until sanctions against it are lifted.
The Wall Street Journal reported that 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.
President Trump told reporters at the White House before departing on a campaign trip that he was weighing his options on Iran.
Saudi Arabia resumed oil tanker loadings from Yanbu on Tuesday, after restarting operations on its East-West Pipeline.
In relation to supply, three oil tankers have been hit by unknown projectiles while transiting the Strait of Hormuz this week. Three Liberia-flagged tankers with their transponders switched off were transiting the Strait on Tuesday and Wednesday when they were hit by projectiles.
