London: Oil prices rose around 2% on Thursday after China suspended oil products exports, potentially tightening fuel markets already coping with supply shortages globally, while investors continued to assess diplomatic efforts to end the US-Israeli war on Iran.
The new front-month December Brent crude futures contract traded at $101.20 per barrel at 6:17 PM, up 3.2%, or $3.17, from Wednesday's close. The November contract expired on Wednesday, settling at $103.50 a barrel, marking a monthly gain of nearly 14% in September for the front-month contract.
US West Texas Intermediate crude futures were up $1.58, or 1.8%, at $92 a barrel, having traded close to $93 earlier in the session.
Prices were volatile on Thursday, having slipped more than 1% in early trading, before rebounding.
Chinese refiners have suspended exports of oil products to regions beyond Hong Kong and Macau until further notice, four people briefed on the matter said on Thursday, a move that will further crimp war-constrained fuel markets.
"The Chinese export ban suggests concerns about domestic product availability," UBS analyst Giovanni Staunovo said, adding that it remains to be seen whether the measures will support higher crude imports after recent drawdowns in Chinese crude and fuel stocks.
Global diesel supplies have tightened as a result of falling refining capacity due to attacks linked to the West Asia and Ukraine wars, raising pressure on governments to intervene to shield consumers.
"China's pause removes a source of flexible supply at a particularly difficult moment. Middle Eastern disruptions have already reduced the availability of refined products, so importers have fewer alternatives," said Nitesh Shah, commodity strategist at WisdomTree.
