China eases fuel export curbs for July after 4-month private refiner halt

China lifted refined fuel export restrictions for the rest of July and allowed a private refiner to resume shipments after a four-month halt, trade sources said, as the world's biggest refiner returns toward normal operations after the Iran war.

"The return of Chinese refined product exports will help offset some of the supply tightness that built up during the Strait of Hormuz closure," the U.S. Energy Information Administration said in its July 2026 Short-Term Energy Outlook, which raised global oil production forecasts and projected Brent crude at $74 a barrel in the third quarter.

China began restricting refined fuel exports in March after the US-Iran war erupted, with the Strait of Hormuz closure cutting off a significant portion of global crude flows. The world has absorbed the loss of more than 1 billion barrels of oil supply since the conflict began, according to Reuters. The EIA's revised outlook now factors in the strait's reopening, lifting production forecasts and easing some of the upward pressure on crude prices.

The easing of Chinese export curbs adds a new supply source to global refined product markets at a time when Brent crude is forecast to average $74 a barrel in the third quarter, according to the EIA. If China sustains or expands these export allowances beyond July, it could further pressure refining margins in Asia and Europe, where tight supply had supported product prices since the war began.

China's export restrictions had been one of several supply-side supports keeping global fuel prices elevated after the Iran conflict disrupted crude flows through the Strait of Hormuz. The private refiner's return to export markets after a four-month pause is particularly notable, as independent refiners — known as "teapots" — had been among the hardest hit by the export clampdown.

The policy shift comes as China's domestic fuel demand shows signs of stabilizing, giving policymakers more room to allow outflows. The country's refining industry, the world's largest, had prioritized domestic supply during the initial months of the Iran war, when crude import routes were disrupted and global prices spiked.

With the Strait of Hormuz now reopened and global crude supply recovering, China's return to export markets could accelerate the rebalancing of global refined product inventories. The EIA's July STEO already reflects higher production expectations, and additional Chinese exports would reinforce that trend.

This article is for informational purposes only and does not constitute investment advice.