The restriction, imposed last week and expected to remain in place until at least the end of March, aims to prevent domestic shortages in China, the world’s largest oil importer, according to market sources.

The move curtails exports that were valued at about $22 billion last year.War disruptions amplify supply strainEven before the export curbs, Asian refiners were seeking alternative crude supplies as the conflict in the Middle East disrupted flows from the Gulf.

Several refineries in the region, a key supplier of fuel to Asia, have shut operations as shipping through the Strait of Hormuz was halted.

The combined impact has intensified competition for available cargoes, leaving import-dependent economies exposed to supply shocks.

Australia, Bangladesh and the Philippines, which rely heavily on Chinese refined fuel exports, are expected to face immediate challenges in meeting demand.

China accounted for roughly one-third of Australia’s jet fuel imports last year and about half of supplies to Bangladesh and the Philippines in 2024.

China ranks as Asia’s fourth-largest exporter of refined, or “clean,” fuels after South Korea, India and Singapore, and plays a pivotal role as a swing supplier when regional demand fluctuates.

Analysts say the sudden halt in exports leaves limited room for other suppliers to compensate. “The remaining Asian exporters simply do not have the spare volumes to replicate China’s role as the region’s swing supplier,” Kpler analyst Zameer Yusof said.

Benchmark refining margins in Singapore, known as “cracks,” are expected to continue rising as markets adjust through higher-priced replacement cargoes or reduced demand.

Fuel prices across Asia have climbed sharply. Diesel derivatives rose to $150 per barrel on March 17, while jet fuel swaps reached $163 per barrel, up from about $92 before the war, according to LSEG data.

Gasoline traded at $139.80 per barrel on Monday, compared with $79.30 on February 27.The tightening market is already affecting downstream sectors. Vietnam has warned airlines to prepare for potential flight cuts from April due to fuel shortages linked to export restrictions.

China’s Foreign Ministry said on Monday that military action in the Middle East should cease and that Beijing is willing to work with other countries to ensure energy security.

In a social media post, Trump said U.S. forces had “totally obliterated every MILITARY target” on the island while deliberately leaving oil export infrastructure intact. Kharg Island, located about 16 miles (26 km) off Iran’s coast, handles roughly 90% of Iran’s oil exports.

The president said the decision not to strike oil facilities could be reconsidered if Iran or other actors interfere with the “Free and Safe Passage of Ships” through the Strait of Hormuz, a critical maritime route through which roughly a fifth of global oil supply moves.

Iran has been attacking vessels in the waterway during the conflict, halting most commercial shipping traffic and intensifying volatility in energy markets.

Kharg Island lies roughly 300 miles (483 km) northwest of the Strait of Hormuz and serves as Iran’s principal crude export terminal. Satellite imagery reviewed by tanker monitoring service TankerTrackers.com showed multiple very large crude carriers loading at the island earlier this week.

Despite escalating military tensions in the Gulf, Iran has continued shipping crude from Kharg. Between Feb. 28, when the conflict began, and Wednesday, exports ranged between 1.1 million and 1.5 million barrels per day.

Other Gulf producers have temporarily halted shipments because of security concerns linked to Iranian attacks on shipping routes.

Speaking to reporters on Friday, Trump declined to provide a timeline for the conflict’s conclusion.

“I can’t tell you that,” the president said. “I mean, I have my own idea, but what good does it do? It’ll be as long as it’s necessary.

”Oil markets have fluctuated sharply in recent days as investors reacted to shifting signals from Washington about the duration and scope of the conflict.

The United States is sending additional military forces to the Middle East as tensions with Iran escalate around the Strait of Hormuz.

Trump also said Iran had “no ability to defend against U.S. attacks,” urging Iranian forces to lay down their arms.

The confrontation has raised concerns among energy analysts and governments about the risk of a prolonged disruption to global oil supply, with the International Energy Agency previously warning that the conflict could trigger one of the largest supply shocks in modern energy markets.

The assurance was conveyed after recent conversations between S. Jaishankar, India’s foreign minister, and his Iranian counterpart Seyed Abbas Araghchi, according to the Indian source, who declined to be identified because they were not authorised to speak publicly.

India, the world’s third-largest oil consumer, depends on the Strait of Hormuz for roughly 40% of its crude imports, making the security of shipping routes a key concern amid regional tensions.

India’s foreign ministry confirmed that the two foreign ministers had held three conversations in recent days. The most recent discussion focused on maritime safety and the protection of India’s energy supply lines.

“Beyond that, it would be premature for me to say anything,” foreign ministry spokesperson Randhir Jaiswal told a weekly press briefing.

In a statement following the talks, Iran’s foreign ministry said the United States should be held responsible for the “insecure situation and problems arising for shipping in the Persian Gulf,” but neither side publicly mentioned any agreement on safe passage for Indian vessels.

On Thursday the Suezmax tanker Shenlong, carrying Saudi crude oil, arrived at a port in Mumbai after transiting the Strait of Hormuz, according to shipping data from the London Stock Exchange Group.

The Liberia-flagged vessel was the first crude tanker to reach India from the Middle East since fighting involving Iran, the United States and Israel erupted in late February. The cargo was purchased by state-run Bharat Petroleum Corporation, a source with direct knowledge of the matter said.

The Indian source added that two other foreign-flagged tankers believed to be carrying oil bound for India had also recently crossed the strait.

India said on Wednesday that 28 Indian-flagged vessels were operating west and east of the Strait of Hormuz, carrying a total of 778 Indian sailors.

Authorities, shipping companies and recruitment agencies are coordinating with Indian embassies and local authorities to ensure the safety of seafarers, the petroleum ministry said.

India has also given safe harbour to 183 Iranian sailors after a vessel docked in the country following the outbreak of the conflict. New Delhi had allowed three Iranian ships returning from a naval exercise in the Bay of Bengal to dock; one of the vessels was later sunk by a U.S. submarine in international waters, while another sought assistance from Sri Lanka.

The shipments are part of a broader shift in oil trade flows as exporters and buyers respond to uncertainty surrounding the movement of energy supplies through traditional Gulf shipping lanes. Saudi Arabia, the world’s largest oil exporter, has been increasing shipments from its Red Sea facilities as an alternative route amid the heightened regional tensions.

The port of Yanbu on Saudi Arabia’s Red Sea coast has become a key outlet for crude exports during the ongoing conflict, allowing shipments to bypass the Persian Gulf and potentially vulnerable maritime chokepoints.A source familiar with the matter said Indian Oil Corp had secured cargoes from Yanbu, although details on volumes and delivery schedules were not disclosed. The move reflects efforts by refiners to diversify loading points and ensure steady supplies at a time when geopolitical risks are affecting the movement of energy commodities across the Middle East.The conflict involving the United States, Israel and Iran has disrupted oil and natural gas exports from the region, according to industry sources, prompting producers and buyers to explore alternative routes and supply arrangements.

At the same time, Russia is examining the possibility of redirecting liquefied natural gas shipments originally intended for Europe toward Asian markets, including India and China.Russia’s Deputy Prime Minister Alexander Novak said on Friday he had discussed with domestic energy companies the prospect of shifting LNG flows to other countries, according to reports by the Interfax news agency and Izvestia newspaper.A government source in New Delhi said Indian companies had previously purchased both sanctioned and non-sanctioned Russian oil after the United States granted India a waiver. The source added that India would also consider buying Russian LNG if supplies were offered.

Despite the disruption to global energy flows, Indian officials said the country’s domestic fuel market remains stable. A separate government source said there were currently no plans to raise retail prices of petrol and diesel.The official added that national fuel inventories were increasing steadily, indicating that refiners and distributors had sufficient stocks to meet demand.India is the world’s fourth-largest buyer of LNG, and authorities have in recent months rationed supplies to some industries, several of which have reported disruptions linked to tighter availability of natural gas.The adjustments by Indian refiners and policymakers underscore the wider impact of the Middle East conflict on global energy trade, with importers seeking supply flexibility while exporters recalibrate routes and destinations for crude oil and natural gas shipments.