Crude oil imports across Asia, the world’s largest importing region, have shown a notable recovery in August following a two-year low recorded in July.
China, the leading global crude importer, increased its imports by over 1 million barrels per day (bpd) in August compared to July, according to data from LSEG Oil Research. Other major Asian importers, including India, South Korea, and Japan, also reported higher import levels in August after a dip in July. The rebound is partly attributed to seasonal demand, as third-quarter imports typically rise to prepare for increased winter fuel needs.
Additionally, the drop in oil prices could have influenced this uptick. August’s shipments were likely secured in early June when Brent Crude prices fell to $76-$77 per barrel. Despite weaker-than-expected oil demand in China, lower international prices may have significantly contributed to the country’s increased imports.
Looking ahead, a key factor will be whether the rise in oil prices to over $85 per barrel in early July dissuades refiners from increasing September purchases. The sustainability of August’s import rebound will be crucial in determining oil price trends for the remainder of the year.
In August, Asia’s total crude oil imports were estimated at 26.74 million bpd, marking a 2.18 million bpd increase from July’s two-year-low figures, LSEG Oil Research data revealed. July’s imports had hit their lowest daily level since July 2022, largely due to seasonality and decreased demand in India, the third-largest global crude importer. Weak demand from China, affected by a sluggish economy, a property crisis, and subdued fuel consumption, had also raised market concerns about second-half demand.
Sinopec, Asia’s largest refiner, confirmed these concerns in its first-half earnings report, reflecting weak fuel demand in China. Despite a 1.7% increase in net profit year-over-year, driven by higher domestic production and rising international oil prices, the company’s refining metrics deteriorated compared to the same period last year. Sinopec noted “severe challenges” due to weak market demand and narrowing product margins.
LSEG Oil Research estimates China’s crude oil imports for August at 11.02 million bpd, up from 9.97 million bpd in July, according to official customs figures. This increase appears more influenced by the lower oil prices from early June rather than a significant shift in Chinese oil demand.
Overall, China’s commodity imports this year, including LNG, coal, copper, and iron ore, have been closely aligned with international price trends. Despite ongoing economic challenges and a property crisis, China’s imports have surged in the first half of 2024, reflecting a strategic approach to purchasing commodities at lower prices, including a growing reliance on discounted Russian crude.
Related topic:
Why Are Diesel Engines Used for Heavy Equipment?
