For some context, China has been actively restricting refined fuel exports since the US-Iran war began. It all started with an immediate ban in March here, before some easing in the restrictions since April onward.

However, the latest directive here marks a significant change in the tone and surely it has a lot to do with Iran being able to get out a massive amount of oil shipments in recent weeks. That owes much to the US lifting oil sanctions on Iran, which now appear to be back in place after Trump’s order here.

As such, the timing of China’s decision is rather interesting but then again it is only for the month of July. The restrictions on refined fuel exports could surely return in August or even later this month if the Strait of Hormuz situation worsens further.

In any case, this will be the first time that the likes of Zhejiang Petroleum & Chemical Co. (one of the world’s biggest refiners) would be able to resume fuel exports after having halted them for more than 3 months.

In recent weeks, Iran has managed to rush out approximately 40 million to 50 million barrels of oil and the majority of which arguably goes to China.

Before the war, China accounted for roughly 90% of Iran’s oil shipments via its “shadow fleet”. And even then, the shipments were only around 1.5 million barrels per day.

So, the surge in recent weeks will also be mostly to one place with just a couple of smaller flows to the likes of Japan, India, and South Korea.

That is perhaps the key factor in allowing China to make the decision as seen above for July at least.

This article was written by Justin Low at investinglive.com.