China has seen a significant surge in crude oil imports, reaching an average of 12.38 million barrels per day in November 2023. This figure represents a 4.88% increase compared to the same month last year and marks the highest import rate since August 2023, according to government data reported by Reuters.
The data reveals that November’s imports also reflect a 5.24% rise from the previous month, contributing to a total of 521.87 million tons of oil imported between January and November, which averages out to 11.45 million barrels daily. This increase in imports comes despite a backdrop of fluctuating demand and geopolitical tensions.
Shifts in Supply Sources
In November, China’s oil supply dynamics shifted notably. Shipments from Russia decreased by 157,000 barrels daily to an average of 1.19 million barrels daily. Conversely, imports from Saudi Arabia rose significantly, increasing by 345,000 barrels daily to reach 1.59 million barrels daily, making Saudi Arabia China’s largest oil supplier for the month.
Additionally, imports from Iran saw a substantial increase, with an additional 233,000 barrels daily from October, resulting in an average of 1.35 million barrels daily. The changes in supply sources highlight the complexities of international oil trade, particularly in light of ongoing sanctions affecting Iranian and Russian oil exports.
Impact on Domestic Demand and Refining Margins
According to Emma Li, head of China analysis at Vortexa, domestic demand for oil has experienced a seasonal decline. Nevertheless, sanctions on crude supplies from Iran and Russia have led to significant price reductions for feedstock, boosting refining margins. This situation has encouraged more refineries to apply for advance import quotas ahead of the initial batch expected in 2026.
Despite the recent increases in imports, forecasts suggest that demand for crude in China, the world’s top oil importer, is likely to remain weak until at least the middle of next year. The market research unit of CNPC, the Economics and Technology Research Institute, indicated that while stronger economic growth and demand for petrochemicals are expected to lift China’s oil demand by 1.1% this year, consumption of transportation fuels has likely peaked.
Independent refiners in Shandong province are responding to the changing market conditions by ramping up oil purchases and processing. Following the issuance of new crude import quotas by Beijing, these refiners are actively working to reduce oil in storage. Analysts believe this strategy could alleviate the perceived supply overhang before the year concludes.
The latest developments in China’s oil imports illustrate the ongoing shifts in global energy dynamics, influenced by both domestic policies and international relations. As the country navigates these complexities, the impact on the global oil market remains to be seen.
