China's Oil Imports Rebound, Boosting African and American Crude Prices

Key facts

• Chinese crude oil imports are rising from a decade low, boosting demand for African and American grades.
• Congo's Djeno crude is being offered at a premium of $20 per barrel over ICE Brent.
• Crudes from Canada, Brazil, and Argentina are also seeing price increases due to Asian demand.
• Asian refiners are sourcing oil from as far as Argentina to compensate for Middle East supply disruptions.
• China's August crude imports were estimated at 7.3 million barrels per day, below pre-war levels.

Prices for crude oil from Canada, South America, and Africa have surged recently as China's demand for oil imports rebounds from a decade low. This increased appetite in Asia, coupled with ongoing disruptions in Middle East supply and the drying up of Iranian crude due to U.S. sanctions, has driven benchmark prices higher.

Traders report that Djeno crude from Congo, a smaller OPEC producer, is now being offered at a $20 per barrel premium over ICE Brent, a significant increase from $15 per barrel two weeks ago. Similar price increases are being observed for crudes from Canada, Brazil, and Argentina.

Asian refiners, including those in China, Japan, and South Korea, are actively seeking oil from distant sources like Argentina to compensate for reduced supplies from the Middle East. China, in particular, is increasing its purchases of African and American crude grades, alongside its preferred ESPO blend from Russia, as Iranian supply has diminished.

China, the world's largest crude importer, saw its imports recover in August after hitting a June low. This rebound was partly due to Beijing easing fuel export restrictions and refiners restocking to capitalize on decent refining margins. However, August imports, estimated at around 7.3 million barrels per day, remain substantially below the 11-12 million barrels per day seen before the conflict in the Middle East, indicating China's continued selectivity in purchasing amid volatile prices. The country had previously amassed an estimated 1.4 billion barrels of crude in storage.