Just in time for America’s midterm elections, China is giving already-strained fuel markets another headache.
No release of a deadly virus or COVID lockdowns required this time.
According to media reports [1], Chinese refiners have suspended October exports of gasoline, diesel, jet fuel and other petroleum products to markets outside Hong Kong and Macau. The official explanation? China says it needs to rebuild its own domestic fuel supplies. Whether that’s the whole story is another question, but the result is the same: less Chinese fuel heading onto the global market.
State-owned PetroChina is getting in on the act as well, canceling several gasoline and jet-fuel shipments that had already been scheduled for October.
There is, of course, no evidence the decision was timed to influence U.S. elections, but the timing certainly isn’t doing American drivers – or President Donald Trump – any favors.
The move comes just days after Trump urged [2] Chinese President Xi Jinping to increase production of refined petroleum products to help stabilize global supplies. Instead, the Chinese leader did the opposite and effectively turned off the export spigot.
And markets noticed.
Brent crude jumped more than 4% Thursday, settling above $102 a barrel, as China’s decision added another supply problem to disruptions involving Russia and the Middle East.
Diesel has become particularly painful, recently reaching a record $6.53 per gallon nationally, while gasoline prices have risen about 40% over the past year.
So with Election Day approaching, Americans can add Beijing to the growing list of global players making a trip to the gas station considerably less enjoyable.
China may say it’s simply protecting its own fuel supply – and that may be part of the story. But with America’s midterm elections just weeks away, Trump fighting to keep Republican majorities in Congress and voters already angry about prices at the pump, the timing raises an obvious question: Would Beijing mind helping to make sure that Trump is handed a midterm defeat? Probably not.
Meanwhile, there may be at least some relief coming from the Middle East. Gulf oil exports have rebounded to roughly pre-war levels in September, with about 16.5 million barrels of crude per day leaving the region from producers other than Iran, according to tanker-tracking data cited [3] by Just the News. Gulf producers have increasingly routed oil around the Strait of Hormuz through pipelines in Saudi Arabia and the United Arab Emirates, reducing Iran’s ability to disrupt global supplies by threatening the critical waterway. Iran, meanwhile, has largely been left out of the rebound as a U.S. blockade has kept its own crude exports near zero.
So what does all of this mean for Americans pulling up to the pump before Election Day? That remains the multibillion-dollar question. China taking fuel exports off the global market could put upward pressure on prices, while recovering Gulf oil shipments could help offset some of that squeeze. How those competing forces ultimately shake out – and how quickly they reach neighborhood gas stations – could matter politically as voters head to the polls with one of the most visible measures of the economy staring back at them from the giant price sign on the corner.