Chinese imports of crude oil surged by 22.5% year-over-year in March to the highest monthly volumes in nearly three years, since June 2020, official data showed on Thursday as refiners are increasing fuel output to meet expected rising demand after the reopening.
Last month, China imported as much as 52.3 million tons of crude oil, per data from the country’s General Administration of Customs cited by Reuters. The import volumes in tons equal 12.3 million barrels per day (bpd)—the highest for any month since June 2020, and much higher than the 10.1 million bpd of crude oil imports in March 2022.
For the first quarter, China’s crude oil imports rose by 6.7% compared to the same period in 2022, according to the customs data.
Refiners in China have ramped up refinery runs in recent weeks, preparing for a rise in consumption and looking to capture strong margins, now that the country has ditched its “zero-Covid” policies and removed the strict curbs on travel.
A rebound in crude oil demand, as the Chinese economy returns to normal operation, pushed crude oil throughputs at refineries higher by 3.3% over the first two months of the year. At an average of 14.36 million bpd, per Reuters, Chinese refinery throughputs in January to February compared with 13.98 million bpd for the first two months of 2022 and 14.1 million bpd for December 2022.
Because of a rebound in economic activity, many expect demand for crude oil in China to surge to new record highs, driving record imports, too.
China’s economic growth could exceed official targets and consumer mobility and spending could surge after the reopening to super-charge a renewed increase in energy commodity prices, especially crude oil, Wood Mackenzie said in a report at the end of March.
Under WoodMac’s base-case scenario, Chinese oil demand would rise by 1 million bpd this year, driving the expected 2.6-million-bpd growth in global oil consumption. In a high-growth scenario, the world’s top crude oil importer could see oil demand jumping by 1.4 million bpd on the year, or about 400,000 bpd higher than in the base case, driving up oil prices by another $3-$5 per barrel compared to the base case.
By Tsvetana Paraskova for Oilprice.com
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China’s economy is projected to grow in 2023 at 5.2%-6.5% according to the IMF. In fact China’s economic growth could exceed official targets this year.
China’s domestic crude oil demand is projected to hit 17.0 million barrels a day (mbd) this year with crude imports ranging from 12.0-13.0 mbd aided by Chinese refinery throughputs hitting an average of 14.36 mbd in January and February 2023 compared with 13.98 mbd for the first two months of 2022, a rise of 2.7%. For the first quarter, China’s crude oil imports rose by 6.7% compared to the same period in 2022.
China could be expected to add 1.15 mbd to global oil demand accounting for 50% of demand growth in 2023.
Yet, the US Energy Information Administration (EIA) says it expects the global oil market to remain in surplus in 2023 and 2024 despite OPEC+’s latest cut and Russia’s production cut. It bases its claim on a wrong assumption that non-OPEC producers such as shale oil, Brazil and Guyana could add 1.5 mbd to global production this year. Nothing could be further from the truth.
US shale is a spent force incapable of raising its production significantly. Brazil could hardly satisfy its domestic demand and Guyana is a small fish.
That is why Brent crude is projected to hit $90.0 in the first half of 2023 and touch $100.0 during the year.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert