China’s oil demand could soon rebound as the country reopens from Covid after nearly three years. Authorities have issued a massive batch of allowances for independent refiners to import crude oil.
China’s latest batch of crude import quotas for refiners allows 44 private refiners to import 111.82 million metric tons of crude, traders familiar with the Chinese policy told Bloomberg on Monday. Independent refiners are allowed to import certain volumes of crude oil in several batches each year, with quantities set by the Chinese government.
The quotas for this year are already 132 million tons, compared to 109 million tons of crude oil import allowances issued as of this time last year, according to Bloomberg.
China’s reopening is expected to drive fuel demand growth after the initial exit Covid wave wanes at some point later this quarter.
China’s borders reopening this weekend—after almost three years—sent oil prices surging by 3% early on Monday, as the market expects travel to pick up in the coming weeks and around the Lunar New Year on January 22.
Early on Monday, Brent Crude prices jumped above $80 per barrel again as increased optimism about China’s demand trumped—for the time being—fears of recessions looming this year.
In another sign that China’s refiners could import and process additional crude in the coming months, Chinese authorities have approved exports of gasoline, diesel, and jet fuel of 18.99 million tons—an increase of 46% over the 13 million tons of fuel export quotas China allocated in the first batch for 2022, consultancies based in China told Reuters last week.
The latest batch of fuel export quotas signals China’s willingness to continue supporting refinery throughput and capturing good refining margins in Asia while domestic demand is still weak.
By Tsvetana Paraskova for Oilprice.com
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