China's oil industry regulators are to launch a nationwide crackdown on wholesalers who sell to illegal filling stations and dealers in the wake of supply shortages.

The State Administration for Industry and Commerce (SAIC) announced on Monday that the seven-month campaign, starting from May, was aimed at improving oil quality sold on the market and preventing illegal hoarding and profiteering.

A statement posted on the SAIC website said local bureaus would set up a long-term monitoring mechanism for the refined oil market, which would cover companies involved in wholesale, storage and retail.

With high international oil prices, major Chinese cities, including Shanghai, Guangzhou and cities in Guangxi, Yunnan and Zhejiang, suffered fuel shortages last month.

Illegal dealers and filling stations are believed to have aggravated the situation by hoarding oil and jacking up prices to drivers wanting to avoid the long queues at licensed stations.

The supply tension eased a little as both the government and oil companies boosted market supply.

Oil refiners suffered heavy losses as the gap widened between steep crude prices on the international market and the government-controlled oil prices on domestic market.

China Petroleum and Chemical Corp (Sinopec) and PetroChina Co said they would receive "appropriate" monthly subsidies for losses retroactive to April 1.

Meanwhile, the government announced last week tax rebates on some of PetroChina and Sinopec's imported oil products in the second quarter.

(Xinhua News Agency April 22, 2008)