China's suspension this month of exports of oil products to regions beyond Hong Kong and Macau could tighten supplies to some of its biggest buyers including Singapore, Malaysia and Australia.
Expectations for reduced fuel shipments from the world's largest refining hub drove Asian refiners' margins for gasoline to a record of more than $50 a barrel over Brent crude on Thursday, while widening monthly spreads for gasoil and jet fuel into steeper backwardation, a market structure when prices for short-term delivery are higher than those in future months.
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Singapore is the biggest recipient of Chinese gasoline, having imported 1.772 million metric tons (14.97 million barrels) in the first nine months this year, data from analytics firm Kpler showed. The volume is 62% lower than the total for 2025, underscoring tight supply, with light distillates stocks in the Asian oil trading hub at the lowest in five years.
Traders blend gasoline in Singapore for re-export, with Indonesia the top destination.
"We continue to closely monitor developments in China's fuel export policies, which remain dynamic," said Muhammad Baron, a spokesperson at Indonesian state energy firm Pertamina.
He said that Pertamina has a diversified supply portfolio, while it continues to support increased domestic production and the development of biofuels to reduce dependence on imports.
Jet fuel, or kerosene, accounts for the bulk of China's exports, mostly to Hong Kong, which is exempt from Chinese export restrictions.
Australia has emerged as the second largest importer of Chinese jet fuel this year, followed by Vietnam, Japan and Malaysia, Kpler data showed.
For diesel, Singapore is the largest importer from China after Hong Kong, followed by Australia, Malaysia and Bangladesh, according to the data.
"Australia currently has 42 days worth of petrol, 110% above the required volume, and 29 days worth of jet fuel, all within normal levels," the government said on Friday.
Currently, 45 ships are on the way to Australia and 3.5 billion litres of fuel is locked in to be delivered over the next four weeks, it added.
Mukesh Sahdev, Sydney-based chief oil analyst at consultancy XAnalysts, said the direct impact on Australia was limited as the country's largest import is diesel, which largely comes from South Korea, Taiwan, Brunei and Malaysia.
Still, he said, China not putting barrels into the wider market would push prices up for all buyers.
Jet fuel prices strengthened against diesel, widening the price spread between the fuels, known as regrade , to premiums of around $2 a barrel, a level unseen since mid-July, LSEG data showed. Diesel margins eased on Friday to a three-session low of about $67 a barrel after European gasoil futures slipped on the prospect of more supplies.
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European Union countries on Friday discussed a French proposal to release additional diesel stockpiles, in response to US pressure on European nations to unleash more supplies in an attempt to reduce surging fuel prices, a source familiar with details of the discussion told Reuters.
The strength in Asian jet fuel prices versus Europe has shut the arbitrage window for exports from South Korea and Singapore, Sparta's head of commodities James Noel-Beswick said in a note.
"Three weeks ago every Asian jet arb into Europe was wide open," he said. "That picture has fully reversed."
