China’s Crude Oil Imports
Nov. 22, 2024
The determinant of China’s crude oil import preference has mainly been based on the pricing discount they can achieve as Russian barrels remained cost-competitive. China’s crude import has been largely driven by prices on the delivered basis, which explains the significant jump in volumes from Russia and other unconventional exporters. Imports from others including OPEC and non-OPEC countries in the Middle East, West Africa, North and South Americas moved sideways since 2021 (grey area in the left graph), with this volume further sliding in 2024 amid pressured refining margins and runs reported by state-owned oil majors. Geo-events and government policies have also played a crucial role. Despite Houthi promised not to attack Russian and Chinese ships, the 2009-built Aframax Huang Pu was attacked in March 2024 while carrying Russian cargoes through the Red Sea, resulting in China immediately cutting its intake of Russian cargoes from the western ports. Meanwhile, in order to curtail the domestic product surplus, Chinese government has introduced consumption tax on light cycle oil, diluted bitumen and fuel oil in Jun 20201 and Oct 2024, products that most sanctioned Iranian and Venezuelan oil have been rebranded before flowing to China. In both cases, Chinese imports of Diluted Bitumen + Malaysian Blend took a big dip in the following month.
Source: S&P Global, China’s Customs, McQuilling Services
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