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Singapore: China's oil giants Sinopec and PetroChina moved yesterday to more than double diesel imports this month after Beijing unexpectedly raised domestic fuel prices by up to 10 per cent, giving profit margins a fillip.
The main suppliers to the world's second-largest energy user are seeking to buy an extra 120,000 tonnes of the fuel in November, trade sources based in China and Singapore told Reuters, adding to the 90,000 tonnes they have already purchased and potentially lifting imports to their highest in three years.
"The state refiners are in the market seeking cargoes. You can't expect domestic refineries to raise their runs immediately," said one source in Beijing.
The rush to increase shipments risks further tightening world oil markets even as crude hits records above $96 a barrel, one of the main factors behind a severe supply crunch.
Escalating crisis
Late on Wednesday, China rushed to tame an escalating fuel crisis by lifting domestic gasoline and diesel prices by 500 yuan a tonne yesterday, the first increase in 17 months.
That move followed several weeks of worsening shortages that forced diesel rationing across the country and caused many pumps to run dry after refiners decided to cut back on production due to deepening losses in selling fuel on China's regulated market.
Even after the increase, prices are only up by about two-thirds since early 2003.
Crude oil prices have trebled since 2003, and analysts say refiners are still losing money.
Asia's biggest refiner Sinopec is scouting for two 30,000-tonne cargoes, while PetroChina is looking to buy one to two similar-sized parcels.
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