China’s Oil Imports Hit New Highs, Output Soars

China is importing oil at near-record levels while its domestic product has also increased. China’s oil imports in June jumped 45.3 percent on the year to the second-highest monthly figure on record, with refiners building up inventories despite weak domestic demand. Oil imports in June totaled 12.67 million barrels per day–a sharp increase from a year ago when the country was still under Covid-19 lockdowns.

The large increase in oil imports has come after Beijing lifted curbs imposed on independent refiners aka teapots.  Two years ago, the Chinese government announced huge cutbacks in import quotas for the country’s private oil refiners. The import curbs led to a large reduction in total imports as the government cracked down on private Chinese refiners who had become increasingly dominant. The move was intended to allow Beijing to more precisely regulate the flow of foreign oil as it doubled down on malpractices such as tax evasion, fuel smuggling and violations of environmental and emissions rules by independent refiners The crackdown was also intended to claw back control of China’s crude refining sector from private refiners to state-owned refineries. And it’s reminiscent of its earlier crackdown on big tech operations that were getting dangerously powerful and seen to be threatening party politics. 

China has also increased its natural gas imports, with imports of liquefied natural gas (LNG) hitting a 5-month high in June, although weak demand especially in Europe has capped prices. Last month, China imported 5.96 million metric tons of LNG, 28% higher than the 4.64 million the country purchased a year ago and also higher than 5.54 million metric tons imported in May. However, that still proved inadequate as spot price slipped to $9.00 per million British thermal units (mmBtu), 87% below its record high of $70.50 in late August and the lowest since April 2021.

Meanwhile, China has ramped up crude output, and is currently pumping 4.3 million barrels a day making it the world’s fifth largest producer.

By Alex Kimani for Oilprice.com

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