Is China fueling the global crude oil demand recovery?

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The world’s top oil importer, China, significantly boosted its crude oil imports at the start of the year compared to the end of last year. This has helped support global oil demand despite lockdowns in parts of China and many major European economies.   

China’s oil imports are estimated to have jumped by more than 32 per cent in January 2021 compared to relatively weak December imports on the back of strong buying from independent refiners who started to use their allocated import quotas for 2021.

China’s January 2021 crude oil imports are estimated to have reached around 12 million barrels per day (bpd) by Refinitiv Oil Research on data from ports and tanker-tracking. That’s 32.4 per cent higher than the 9.06 million bpd imports in December 2020. 

Even if import quotas provide only a temporary boost to China’s incentive to increase crude oil buying, the fact that the world’s top oil importer significantly raised imports despite the higher oil prices since November is supportive for the oil market and oil prices. 

So Chinese demand continues to support the prices at the start of 2021, after having done so for most of 2020 with record imports, while demand in major mature economies was crashing. 

Refining throughput also hit a record in China last year, as major new facilities entered into service. After a pandemic-hit slow start to 2020, China’s refiners boosted production from April, thanks to ultra-low crude oil prices and a rebound in the Chinese economy and fuel demand, setting a new record for crude oil processing volumes.

Crude oil throughput at China’s refineries averaged 13.51 million bpd in 2020, a 3.2-percent increase over the previous year, according to data from the National Bureau of Statistics.  

At the start of 2021, strong Chinese crude oil imports are adding to a rebound in imports in other major importers in Asia—particularly India, South Korea, and Japan—to support global demand and prices, on top of the continued cuts from OPEC+ and the additional 1-million-bpd cut from Saudi Arabia in February and March. 

Asia’s crude oil imports are estimated to have jumped by 7.5 percent in January compared to December, tanker-tracking and port data compiled by Refinitiv showed

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