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China imported 10.17 million barrels of crude oil daily last year, down by almost a percentage point from 2021. This was the second annual decline in imports in a row after 2021 also saw lower imports than 2020.
Citing data from the Chinese customs authorities, Reuters reported today that the drivers behind the decline were weaker demand and lower refining margins. In the last quarter of the year, however, Beijing started issuing higher fuel export quotas and imports picked up.
Seen as a move to support the Chinese refining industry, the higher fuel export quotas have continued this year as well, spurring expectations of higher oil demand from the world’s biggest importer and pushing prices up.
Crude oil imports in December came in at 11.3 million barrels daily the report noted, which was the third-highest monthly number for 2022 and was the result of more buying of Saudi oil as the Kingdom cut prices for Asian clients.
On the headwind side, Covid-related lockdowns sapped potential demand growth last year but they also gave reason to forecasters to expect a strong rebound this year, the way global demand for oil rebounded after the 2020 lockdowns.
Meanwhile, the country’s refiners continued buying discount Russian and Iranian oil, including new Russian oil grades that were until recently largely shipped to Europe. Along with India, China has become Russia’s largest oil client.
Despite the decline in oil imports for 2022, China has been one of the main drivers behind oil prices during that year. Every lockdown announcement weighed on prices and every report of the pending reopening of the country pushed the benchmarks higher.
This year, too, China is at the top of analysts’ lists of factors that will influence the movement of oil prices. There is a consensus that if China’s economy reopens fully, Brent could shoot up above $100 a barrel again, with some, like hedge fund manager Pierre Andurand, seeing it as high as $140 per barrel if that happens.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com