China Signals Surge In Oil Demand With Major Increase In Import Quotas

China issued a substantial increase in its crude imports quotas for this year, the clearest sign yet that Chinese refiners are set for a material increase in output  - and a surge in demand for oil - as the nation finally moves away from its ridiculous Covid Zero policy.

On Monday, China issued a second batch of 2023 crude oil import quotas, raising the total for this year by 20% compared to the same time last year, according to Reuters and Bloomberg.  According to the document from the Ministry of Commerce, 44 companies, mostly independent refiners, were given 111.82 million tonnes in import quotas in this round.

On Monday, China issued a second batch of 2023 crude oil import quotas, raising the total for this year by 20% compared to the same time last year, according to Reuters and Bloomberg.  According to the document from the Ministry of Commerce, 44 companies, mostly independent refiners, were given 111.82 million tonnes in import quotas in this round.

Combined with the 20 million tonnes in 2023 quotas granted to 21 refineries in October, that takes the total for this year to 131.82 million tonnes, up from the 109.03 million tonnes issued in the first batch for 2022. The second batch of quotas for 2022 was released in June last year.

• Zhejiang Petrochemical Corp, which operates China's biggest privately-owned refinery site, was granted the largest quota of this batch at 20 million tonnes, on par with last year's issuance, according to the documents.
• Hengli Petrochemical received a quota of 14 million tonnes and Shenghong Petrochemical's newly started 320,000 barrels-per-day refinery received 8 million tonnes. Hengli won a quota of 4.83 million tonnes in the first batch in October.

Additionally, as Reuters notes, China, the world's biggest oil importer, allocated some 2023 quotas earlier than usual to shore up the sluggish economy by encouraging refiners to boost operations. 

"The issuance is largely in line with market anticipation, and it suggests that Beijing is trying to boost economy by allowing refineries to ratchet up operation," a Singapore-based oil trader told Reuters.

Global oil futures benchmarks Brent and WTI both gained than $2 a barrel on early Monday trading on optimism for future fuel demand as China dropped its zero-COVID restrictions and began unfettered travel across its borders.

By Zerohedge.com

More Top Reads From Oilprice.com:

• Oil Prices Climb As China Reopens Its Borders
• Colonial Shuts Key Fuel Pipeline To The U.S. Northeast
• Russia Restores Output At Major Oil Project After Exxon’s Exit