Oil Crisis Just Got Real: Sinopec (Read China) Cuts Off Oil Exports

Tyler Durden's picture

As if a dollar in freefall was not enough, surging oil is about to hit the turbo boost, decimating what is left of the US (and global) consumer. Xinhua, via Energy Daily, brings this stunner: " Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan's earthquake, a report said Wednesday. The state-run Xinhua news agency did not say how long the suspension would last but it reported that the firm had said it also would take steps to step up output "to maintain domestic market supplies of refined oil products". Oh but don't worry, those good Saudi folks are seeing a massive drop in demand... for their Kool aid perhaps. "Sinopec would ensure supplies met  the "basic needs" of the southern Chinese special regions of Hong Kong and Macao, but they also should expect an unspecified drop in supply, Xinhua quoted an unnamed company official as saying." Now... does anyone remember the 1970s?

The report said Sinopec has raised output of refined oil products this year, with its first-quarter production reaching 31.55 million tonnes, an increase of 6.2 percent from the same period last year.

Sinopec last month said its 2010 net profit rose nearly 14 percent on higher oil prices and strong domestic demand for refined oil and chemical products.

It reported a net profit of 71.8 billion yuan ($11 billion).

The Beijing-based company attributed the result to China's rapid economic growth, robust oil demand and "the increase in the price of crude oil, oil products and petrochemical products."

It had said at the time that it would continue to "expand markets" in China and overseas this year, while intensifying its exploration efforts in the country's western regions.

Oil prices have surged on supply concerns as governments in the oil-rich Middle East and North Africa are hit by popular uprisings, while the Japan quake and resulting nuclear crisis led the country to seek other forms of energy other than atomic.

And another perspective on how China just gave Geithner and his inflation exporting dreams the biggest, baddest middle finger, from Global Times:

China Petrochemical Corp (Sinopec Group), Asia's largest oil refiner by capacity, said Tuesday it had halted refined oil exports, except those to Hong Kong and Macao, in order to bolster domestic supply. Analysts said the move would help prepare for a possible domestic fuel shortage later this year.
Due to the turmoil in the Middle East and the earthquake in Japan, Sinopec is facing pressure just to meet demand at home, the company said.

The company will keep its refineries running at full capacity, but will cut petrochemical production and reduce the workload at its chemical plant installations to boost the domestic supply of refined oil, it said. It plans to produce 10.54 million tons of refined oil products in April.
The company did not say how much refined oil it would hold back from the international market.

"With the weather getting warmer, more cars hitting the road and increased demand from the construction, industrial and logistic sectors, the consumption of refined oil is expected to surge in April," said Wang Shunzeng, secretary-general of Beijing Petrol Circulation Industry Association.
Meanwhile, due to inflation and the rising price of crude oil, many private refineries have reduced production, making it necessary for State refiners to step in to fill the gap, analysts said. 

China's refined oil inventories fell last month after hitting record highs at the end of February, the National Development and Reform Commission (NDRC) said Tuesday.

The country's apparent refined oil use in March reached a record high of 21.73 million tons, the NDRC said.

"The inventory of refined oil is actually still at the normal level. Sinopec's move suggested that it is making early preparations for peak demand in summer and a possible fuel shortage later this year," Zhong Jian, chief analyst with C1 Energy, told the Global Times.

The country had a shortage of fuels last year, especially a diesel shortfall in the fourth quarter when electricity cuts due to power rationing caused factories to use backup diesel generators to provide power, thus pushing up diesel demand.

Zhong said that China's crude oil processing capability would rise by 17 million tons this year, but this figure is lower than for the two previous years. He also said there would be a 4-million-ton shortage of diesel oil this year

Translation: Shit just got real, and is about to manifest itself in limit ups in both regular, and black gold.

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tickhound's picture

"Now you's can't leave"

SilverRhino's picture

China is preparing for war.

Michael's picture

Lindsey Williams says the elites plan to drive oil over $200 a barrel by whatever means necessary and double cross the Arabs by defaulting on the treasury debt they hold. Book it, it will happen period.!

spiral_eyes's picture

the one problem i can find with lindsey williams' thesis is that i don't believe in the extent of north american oil reserves that he talks about. and even if he's right, bringing the capacity online will be a long and black swan-prone process. so if the kissinger people wanna try and default on treasuries, i think america will lose a lot of energy and industrial capacity, hastening hyperinflation.

oklaboy's picture

I concur, our Industrial and manufacturing base is crumling, and turning it around will be lengthy and painful

Sweet Chicken's picture

Not if there truly is a WWIII in the making.

Ahmeexnal's picture

US oil reserves are greater than estimated.

Ellis Wyatt is obtaining shale oil cheaper than arab oil with his new technology.

But...he's on strike.

Popo's picture

China isn't doing anything of the sort.  This whole post is a non-story.  China is a massive net IMPORTER of oil.   Saying that China is cutting off exports of oil is like saying Finland is cutting off its exports of coconuts.  Please.  

Let's get back to the collapse of capitalism and the onset of global chaos that's actually underway....

Dental Floss Tycoon's picture


You nailed it.  Viet Nam and Indonesia will be squeezed but that's about it.

Popo's picture

The only thing of relevance one can infer from this story is that China predicts oil prices to go up (no big shocker there), and that they are increasing reserves to offset future volatility.    Increasing supplies is just prudent energy policy meant to preserve economic stability, not a shot across the bow.

One could just as easily commend China for this move, as it insures greater supply chain integrity in the face of potential global economic instability/oil supply shocks.  ...But that wouldn't have the same sensationalist fear factor, as "oh noes, shit just got real".

With all of the global economic/political chaos/collapse that's *actually* happening, why does ZH have to jump the shark like this?

youngman's picture

I think what they are doing is controlling a corner of the market...China has been investing in oil companies...fields ..and countries..what they are saying is that any oil they are producing around the world goes to them....not the rest of the world...sort of like silver going from registered to Eligible......its not a fungible product anymore....they are trying to corner the world market in every commodity...

EvlTheCat's picture

It is an inevitable fact when you have multiple personalities at the helm.  Thanks for the sanity check!

dearth vader's picture

Sorry dude, you're mixing up 'oil' and 'refined oil products'.

Coast Watcher's picture

Read the article again. China is cutting its exports of *refined* product, not crude. My guess would be as a domestic buffer against future price increases.

topcallingtroll's picture

Dude, did you quit taking your medicines again?

immalittlepunchy's picture

classic scene. love that line.

onarga74's picture

I think that's youns and it couldn't have an apostrophe cause the word has over 4 letters

Mr Lennon Hendrix's picture

Demand for sea water is not only high in Japan, but in the House of Saud too.

Saudi Arabia did not make up for Libyan oil:


Pondmaster's picture

Libyan = sweet crude

Saudi - sour watered down sludge

Urban Redneck's picture

The real sludge comes from the Orinoco belt and the Canadian tar sands to feed the US markets. 

Sinopec & CNOOC production is still offline in Libya as far as I know, and the firms have also been making investments in Nigerian E&P (land o' bonny light), and just about anywhere else they can find oil.   

Chuck Walla's picture

The Chinese get it and are moving heaven and earth to ensure their supply of oil. Contrast to the idiots running the US asylum. They do everything possible to kill supply until it pisses the voters off. The Child in Chief apparently needs one more term to complete the irreparable damage. Cutting supply also satisfies the Fabian impetus to eugenincs, starvation can rid the world of a lot of undesirables. The new Nazis command the DNC. The world is only fed by the supply of cheap oil.

OldPhart's picture

Owwie, this is going to leave a mark.

buzzsaw99's picture

This move is meant to control fuel prices and trucker strikes. China is a net importer of oil. They better subsidise too.

litoralkey's picture

Three day old news that crossed the Bloomberg ticker for several hours.

Sinopec is exporting diesel while subisidizing diesel internally.

Sinopec had to cut exports last Nov/Dec for same reasons.

looks like the value of the exports has lost utility value versus the placating of the internal political situation.

Since Sinopec is subsidizing the only interesting point is which princelings or state owned enterprises get the newly available supplies at below market prices?

If Sinpec isn't breaking delivery contracts I don't see this as too noteworthy outside of the small increase in demand due to inefficiencies of subsidies.


SilverRhino's picture

Could also be a move to placate the truckers strike going on right now as well.

slewie the pi-rat's picture

Bingo!  the commie party "leadership" cuts off its "partners" in trading oil &tc for yuan and non-dollars while telling its truckers to hammer down their rubber duckies:  we're gonna have us a con-voy!

slewie wants the "i remember the 70's" hat to go with his "$50 BiCHeZ" T shirt!

SilverRhino's picture

Could also be a move to placate the truckers strike going on right now as well.

tonyw's picture

China has been a net oil importer since the mid 90s, here's a good site that allows you to easily see any country's production and consumption for energy sources (coal, oil, gas, nuclear & hydro):


A Man without Qualities's picture

Well, people will just have to stay home and watch Youtube clips of where they want to drive on their iPads...

Sudden Debt's picture

They do this because it's a easy way to subsidise their domestic oil and prevent a rioting population.

It sure looks like the chinese inflation still has some room to move up :)






Antarctico's picture


I must still have sleep in my eyes because I just read this as FUCK SAFETY BALLS! which is not accurate, but is funnier. ;D

FreeMoney Bernie's picture

Fuck safety anything have you seen the price of cocomuts since Finland quit exporting them?

Peak Everything's picture

This is bullshit reporting. How many fucking barrels of oil products have they historically exported?. There is no way to tell from this article what the magnitude of the possible problem is.

Cassandra Syndrome's picture


China exports about half a million Barrels a day, less than 1%. However Libya exports 1.5 Million Barrels a day and look at how much the market freaked out over that tits up.

jomama's picture

meh, that's a drop in the bucket.  figuratively speaking, of course.

Coast Watcher's picture

"Drop in the bucket"? More like the straw that breaks the camel's back.

FreeMoney Bernie's picture

somebody ask the same question above about Finland and coconuts and now Fiji cannot afford the price of coconuts

Cassandra Syndrome's picture


This is good news, right? Bloomberg proves again that the Broken Window is the way forward.


Bennie can print the oil futures now with the new Apple applications, everything is under control. Sit back and relax folks...


BlackholeDivestment's picture

Yeah, I remember the 70's http://www.youtube.com/watch?v=be_BeqiDigo but, there is a Kink in the things ''just got real''. Shit has hit the fan and already flown off. This is the Shit in your face moment. http://www.debka.com/article/20858/


UnBearorBull's picture

Just read your link. Lot going on that could get weird.

How reliable is that source?

BlackholeDivestment's picture

...about as reliable as the dollar. All kidding aside, who would pay for Paki Rats, that store your reported (2?) nukes, to fight the nuke building Iranians that wan't to blow you up, after you just obtained $60+ billion worth of American arms? It's not as if there is any counter intelligence going on or any pre emptive calls for a Nuclear NonPROLIFEration Nobel Prize manwavers from the likes of Rose Mary's Baby (AKA Hussein of Babylon) and the lunatic fringe. http://www.youtube.com/watch?v=oI8ZoWrUrCs&feature=related  I see a Muslim on Muslim war (already on) and a major event. Yes, a quick fearfull slaughter large enough to get all the nations and Israel at the peace table. A false peace that lasts about half as long as the agreement looks about right. An event may happen just in time to affect the 2012 election and the end of QE2, as Comet Elenin is close in September, around the second week, like the 11th possibly eh?

Speculation...  watch.

Sudden Debt's picture

Abdullah will soon be handled. That's pretty much clear richt now.




topcallingtroll's picture

That'll show him.
Teach him a lesson he wont soon forget.

FreeMoney Bernie's picture

that is not allowed in my country without a vail or is it vale or maybe veil. Oh shit just leave by ass alone.

Youri Carma's picture
The "miserable" Arab found out about the US trying to stick a knive in their backs. They wised up and now try to fight the US by getting close to Pakistan and China.


Webster Tarpley: Revolutions or CIA Putsch Campaign in the Middle East? - Alex Jones Tv 1/2 http://youtu.be/ULTap4JbEE4

Webster Tarpley: Revolutions or CIA Putsch Campaign in the Middle East? - Alex Jones Tv 2/2 http://youtu.be/RRpB_Nlx9kQ

'Libyan civilians, new WMD for NATO' http://youtu.be/hWHwwfBbJ1k

Money Squid's picture

Tarpley used to post frequently here, not as an official contributor, but as member. Its been a while since I saw him post a I forgot his screen name. For thest types of issues I always appreciate his perspective.

Coast Watcher's picture

I usually treat Debka with some suspicion, since it's a long been suspected as a Mossad disinformation source. This report makes a certain amount of sense, if you strip away the over-the-top alarmism. Iran has been meddling in Arabian Peninsula politics lately, so it's logical that SA and others would react with some vigor. Given Iran's military strength, though, SA should be prepared for serious losses in its oil infrastructure if it goes forward with a militry confrontation.


Gyro Gearloose's picture

I remember the 1970s very well.  Very long lines of cars backed up on the streets at all the gas stations with your license plate number determining whether you could get gas or not.  Every other day was the only time you could fill up (odd & even#s) unless ya got creative and "borrowed" someone else's plate and 20 to 40 minute waits to get to the pump.

jomama's picture

i'm curious what their impact on the us economy would be in terms of a percentage of daily usage?