LAUNCESTON, Australia, Nov 21 (Reuters) – China’s crude oil imports are expected to rise in November, reaching their highest level in three months. However, the increase is more likely due to favorable pricing than any significant surge in demand.
Crude arrivals could hit around 11.4 million barrels per day (bpd) this month, marking the highest level since August and the third-largest so far in 2024. This estimate is based on vessel-tracking and port data from analysts at Kpler and LSEG Oil Research. If confirmed, November’s imports would surpass the August figure of 11.56 million bpd and rank as the third-strongest month of the year.
Despite this rebound, attributing the rise in imports to a recovery in demand might be overly optimistic. China’s refinery throughput remains weak, and economic indicators suggest the country’s economy continues to struggle. The more likely reason for the increase is price: refiners are capitalizing on lower oil prices, having arranged cargoes earlier when prices were at their lowest.
In September, global benchmark Brent crude fell to its lowest point in 33 months, reaching $68.68 a barrel. The price had been declining since July when it peaked at $87.95 a barrel, fueled by rising Middle East tensions and OPEC+ cutting back on planned production increases. The time lag between when oil is bought and delivered to China, typically six weeks to three months, means November’s arrivals were secured while prices were low.
Chinese refiners have a history of purchasing more crude when prices are low and reducing imports when prices rise too quickly. This trend has been evident in 2024, with imports down by 420,000 bpd in the first 10 months, largely due to price hikes in the second quarter.
Since the September low, crude prices have partially recovered, climbing above $80 per barrel in early October before stabilizing between $70 and $75 per barrel. At this range, refiners are likely to buy only the amount of crude they need, rather than stockpiling surplus oil.
However, the upcoming U.S. presidential election could influence China’s oil strategy, especially for those refiners buying Iranian crude. If Donald Trump returns to the presidency, his administration is expected to reinstate stricter sanctions on Iran, which could disrupt Chinese imports of Iranian oil. Already, some Chinese refiners, particularly independent processors, are scaling back purchases of Iranian crude.
While the overall global supply of crude remains abundant, the potential loss of Iranian barrels could lead to price shifts in the Middle East. Evidence suggests that Brent prices are already rising relative to regional Middle Eastern crude. The premium of Brent over Dubai, tracked by the Brent-Dubai exchange for swaps, has fallen recently, dipping to $1.44 a barrel on Wednesday, down from $2.98 in late August.
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