China Suspends Diesel, Gasoline Exports After Iran Closes Hormuz, Fuelling Global Oil Fears

Last Updated:March 05, 2026, 10:40 IST

Amid the West Asia conflict, Iran on Tuesday announced the closure of the Strait of Hormuz, a key global oil route.

The impact of the West Asia war is beginning to spread across the world. Iran on Tuesday announced the closure of the Strait of Hormuz, a key global oil route. On the same day, China condemned the US-Israel attacks on Iran and stated that it supports Iran against both countries. The developments have increased fears of major disruptions to global energy supplies.

China orders suspension of fuel exports

Following the escalation, China instructed its largest oil refiners to suspend exports of diesel and gasoline immediately, according to a Bloomberg report. The directive was issued verbally by officials from the National Development and Reform Commission (NDRC) during a meeting with refinery executives. Sources familiar with the discussions said the order aimed to respond to growing disruptions in crude supplies from the Persian Gulf.

The report did not publicly name the refiners involved, referring only to the country’s largest companies.

Domestic oil supply takes priority

The export halt is meant to secure domestic fuel supplies as crude shipments from the Gulf face disruption following the closure of the Strait of Hormuz. China sources more than half of its oil imports from the region, and oil prices have already risen by around 15-20%.

China’s major state-owned refiners are believed to be the main targets of the directive. These include Sinopec, PetroChina and CNOOC, which together dominate roughly 80% of China’s refining capacity and Gulf crude imports. Smaller independent refiners were not affected, as authorities focused on building domestic stockpiles.

Gulf conflict disrupts oil flows

The ongoing conflict began after US-Israeli strikes on Iran on February 28. Since then, China’s crude imports have faced severe disruption. Around half of its seaborne oil imports from Gulf countries such as Saudi Arabia, Iraq and the UAE have stalled. Iranian supplies, which accounted for about 13% of China’s imports in 2025, have stopped completely, placing roughly 42 million barrels in floating storage at risk.

Tanker traffic has slowed sharply, freight rates for large oil carriers have risen three to five times, and war-risk insurance has been withdrawn. Some shipments are being rerouted around Africa, adding two to three weeks to delivery times.

Buffers and supply shifts

China holds strategic petroleum reserves of about 900 million barrels, enough to cover roughly three months of demand. Pre-war stockpiling and scheduled deliveries are expected to provide a short-term cushion of four to six weeks.

In response, China has reduced refinery operations, suspended fuel exports and increased reliance on Russian oil supplies. Smaller refiners have been hit hardest by rising prices.

Rising global fuel prices

China’s export suspension, combined with Gulf disruptions, is expected to push global fuel prices higher in the short term. Diesel is likely to face the strongest impact because large volumes of refined products normally pass through the Strait of Hormuz.

Diesel prices in Europe and Asia could rise by 20-30%, with futures already up more than 23%. Petrol prices may increase by 10-20% due to supply chain pressures and higher transport costs.

If disruptions last one to two weeks, price increases may remain moderate. A closure extending beyond a month could push crude prices above $100 per barrel and fuel costs up by as much as 50%.

Higher fuel prices are expected to raise transport and food costs globally, increasing inflation risks. While some countries may attempt to control prices through taxation policies, the longer the conflict continues, the greater the pressure on global energy markets and economic stability.

India containers stuck

Meanwhile, at least 37 Indian-flagged ships, along with 1,109 crew members, are stuck in the region around the Strait of Hormuz, sparking safety and potential trade worries for India. These ships are located in the Persian Gulf and the Gulf of Oman, with some ships awaiting cargo and some already fully loaded.

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