China’s Oil Imports Set to Rebound as Refiners Hunt for New Supply
Crude oil imports into China are set to rise by about 1.2 million barrels per day in the final quarter of the year from the current one, although they will likely remain lower than pre-war levels, Bloomberg has reported, citing energy consultancies. Oil purchases by Chinese refiners are climbing back towards 10 million barrels daily but may not hit that number until the end of the year, according…
China's crude oil imports are projected to increase by approximately 1.2 million barrels per day during the final quarter of the year, according to Bloomberg, which reports the estimate from energy consultancies. While imports are expected to surpass pre-war levels, they may not reach the pre-pandemic peak of 12 to 13 million barrels daily by year-end, as cited by analysts from Rystad Energy, Energy Aspects, and FGE NexantECA.
The fourth-quarter import rate could reach 9.9 million barrels per day, a far cry from last year's high, when Chinese oil purchases peaked between 12 and 13 million barrels daily.
The price of crude oil is the primary factor limiting Chinese oil purchases. With Brent crude trading above $93 per barrel and the OPEC basket at $91.27, Chinese appetite for oil is diminishing. This is further compounded by the fact that China retains a substantial inventory of 1 billion barrels of crude, accumulated over the past two years.
Additionally, the type of crude required by most Chinese refineries plays a role. Chinese refineries primarily need medium sour crude, which they typically sourced from the Middle East. However, with exports from this region significantly lower than at the beginning of the year, Chinese refiners are compelled to seek alternatives in Africa and South America.
According to Energy Aspects analyst Jianan Sun, "With the prolonged war and Middle East flows still disrupted, high crude prices are preventing larger demand drivers like stockpiling from taking place." This sentiment is echoed by the Chinese buyers who are replacing Iranian barrels, which have been frozen due to the U.S. naval blockade, with Russian barrels.
Chinese imports of Russian crude are expected to reach 1.25 million barrels daily, according to new Kpler data. This would be a decrease from 1.42 million barrels daily in July, but still represents a considerable volume, considering Iranian oil imports are projected to fall to around 340,000 barrels daily in August.
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