Key facts
- Analysts revised down China's Q4 crude import forecasts by 400,000 bpd.
- China's crude oil imports are expected to be 9.2-9.3 million bpd in Q4.
- This Q4 forecast is well below last year's average of 11.6 million bpd.
- High oil prices above $100/barrel and reduced supply from Iran and Venezuela are impacting imports.
- Independent refiners may reduce processing rates due to rising costs and supply constraints.
China's crude oil imports are not expected to see a significant increase through the end of the year, with analysts revising down their fourth-quarter forecasts by approximately 400,000 barrels per day. This downward revision is attributed to oil prices surging above $100 per barrel and independent refiners struggling to secure cheaper supply as Iranian barrels become scarce.
While China's crude oil imports rose for the second consecutive month in August, reaching 23.4% lower than the previous year, the outlook for the remainder of the year has deteriorated. September-arriving cargoes were purchased at prices in the $80s, but the subsequent price re-escalation has kept Brent crude above $100 per barrel. This high price environment, coupled with supply constraints from countries like Venezuela and Iran due to U.S. foreign policy, is impacting China's independent refiners, often referred to as 'teapots'.
Analysts from FGE NexantECA and Energy Aspects now anticipate China's crude oil imports to range between 9.2 million and 9.3 million barrels per day in the fourth quarter. This figure is considerably lower than the 11.6 million barrels per day average recorded last year. "We don’t expect significant upside to China’s crude imports, partly as hefty premiums and expensive freight drive up the cost of feedstock, eroding margins," stated Samuel Kong, senior oil analyst at FGE NexantECA.