Chinese refiners reduced their run rates to the lowest in four years as crude imports dropped to an eight-year low, Bloomberg reported today, citing official statistics data.
The average run rate for Chinese refineries in May stood at 66.3%, with total volumes processed over the month down by 9.1% on the year to 53.72 million tons, the data also showed.
The data follows earlier figures released by China’s statistics agency showing that crude oil imports into the country plummeted to the lowest since 2018 in May as a result of the price rise triggered by the supply squeeze in the Middle East.
The May total stood at 33 million barrels, or 7.8 million barrels daily, which compares to an average daily import rate of 11.6 million barrels last year. Fuel exports were also down, with Beijing careful to make sure there is enough diesel and gasoline for the domestic market.
China’s subdued oil buying from abroad “represents one of the largest offsets to the shock, second only to Saudi rerouting flows and larger than coordinated SPR releases from the U.S., Europe, and Japan,” Societe Generale commodity analysts said earlier this month, echoing statements from the majority of analytical outlets. The argument is that China’s cutting of crude oil purchases from abroad has gone a long way towards cushioning the blow from Iran’s closure of the Strait of Hormuz, by reducing overall demand for the commodity.
Now the question is whether this demand destruction would be permanent or imports will rebound once prices decline to a sufficient level. After all, China could afford to slash imports thanks to it sizable stockpile of crude, estimated at up to or even over 1 billion barrels as of the end of 2025. This would need to be replenished, as Kpler analysts pointed out in a recent report.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
- Oil Prices Plunge as U.S. and Iran Reach Deal to Reopen Strait of Hormuz
- Russian Governors Rush to Deny Fuel Crisis as Rationing Spreads
- Nigeria’s Crude Oil Production Hits 15-Month High
