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 to analysts from Rystad Energy, Energy Aspects, and FGE NexantECA. Fourth-quarter import rates could reach 9.9 million barrels daily, which would be much lower than last year’s peaks of between 12 and 13 million barrels daily.
Prices are what is keeping Chinese oil buying in check. With Brent crude above $93 per barrel, and the OPEC basket at $91.27, appetite for oil is weakening, especially since China still has quite a bit of oil in storage after building inventories of over 1 billion barrels over the last two years.
There is also the matter of crude type. Most Chinese refineries require medium sour crude, a lot of which they were receiving from the Middle East. With export there still severely lower than they were at the start of the year, Chinese refiners are having to look for alternatives in Africa and South America.
“With the prolonged war and Middle East flows still disrupted, high crude prices are preventing larger demand drivers like stockpiling from taking place,” Energy Aspects analyst Jianan Sun said, as quoted by Bloomberg.
Meanwhile, Chinese buyers are replacing Iranian barrels frozen by the U.S. naval blockade with Russian barrels. According to new Kpler data, China is on track to import Russian crude at a rate of 1.25 million barrels daily. That would be down from 1.42 million barrels daily in July, but still a significant volume as Iranian oil imports slump to an estimated 340,000 barrels daily for August.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
- Iraq-Syria Oil Pipeline to Bypass Hormuz Is 4 Years and $15 Billion Away
- China’s Renewables Boom Faces Record Clean Power Curtailments
- $100 Diesel Cracks Signal a Much Tighter Oil Market Than Brent Suggests
