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China has issued the first round of crude oil quotas for next year, and it is 18 percent higher than the respective round for 2019, Reuters has reported, citing unnamed sources in the know.
At 122.59 million tons, the first 2021 quota batch equals almost 900 million barrels, based on a conversion factor of 7.33 barrels per one metric ton of crude. According to the report, China had announced earlier it would increase the oil import quotas for independent refiners by 20 percent next year, to a total of 243 million tons.
China has been buying oil at record rates this year after a short lull during its lockdown in the spring. The country's refiners took advantage of historically low prices to stock up, and so did the government, filling up its strategic oil reserve.
Yet the rate of imports is slowing down first, because independent refiners began to exhaust their quotas for 2020 and second, because storage filled up. Now, new refineries are starting operation, which is what motivated the planned increase in import quotas for independents. How demand for fuels will fare is a different matter.
Earlier this month, the country's biggest refiner, Sinopec, said it expected demand for fuels in China to peak by 2025 because of the effects of the pandemic and the rise of electric vehicles.
"China's oil products will enter a final growth phase before peaking in the next five years," the Economics and Development Research Institute (EDRI) at Sinopec said.
According to the research institute, gasoline demand in China will likely peak in 2025, while demand for diesel could peak as soon as next year.
In 2020, Chinese oil product demand is seen down by 7 percent annually, EDRI said, as the pandemic cut consumption in China first.
Crude oil throughput rates at Chinese refineries, on the other hand, are expected to remain flat year over year in 2020, at around 13.4 million barrels per day, the think-tank forecast.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com