In 2Q22, China processed the least amount of crude oil since 1Q20, when the COVID-19 pandemic had the strongest effect on China’s economic activity. The resurgence of COVID-19 cases since March 2022, and China’s policy of localised mobility restrictions, explain the country’s reduced demand for petroleum products, and as a result, reduced refinery activity, in 2Q22.
In addition to decreased domestic demand, lower export quotas for finished petroleum products, beginning around 2H21, have contributed to reduced demand for crude oil processing in China. Because China has been processing less crude oil, it has also been importing less crude oil for processing. China’s crude oil imports peaked in late 2020 and early 2021, before decreasing as a result of lower domestic demand and higher global crude oil prices.
China’s crude oil imports were particularly low in June and July 2022. In June, China’s crude oil imports decreased to 8.8 million bpd, the least since July 2018. Imports remained at 8.8 million bpd in July, down 2.0 million bpd from May of this year, but increased to 9.5 million bpd in August.
Despite China’s total crude oil imports decreasing in recent months, China’s crude oil imports from Russia have increased from 8% (slightly less than 400 000 bpd) of total crude oil imports in 2011 to about 16% (1.6 million bpd) in 2021, and to as much as 21% (2.0 million bpd) in August 2022. Russia's share of China’s crude oil imports was 20% in June and 19% in July.
Western economic sanctions have reduced consumption of Russia’s crude oil in many countries. Europe, for example, has been looking for alternative sources, driving up prices for Brent crude oil and leaving crude oil prices in Russia at a discount. Likely in response to these dynamics, China has shifted its imports away from more expensive western sources to imports from Russia.
Read the article online at: https://www.hydrocarbonengineering.com/refining/05102022/china-processed-a-reduced-volume-of-crude-oil-in-2q22/
You might also like
Iain Gilmore, Senior Manager, Catalyst Technologies, Johnson Matthey, and David Kettner, President and General Counsel of Virent, shed light on a groundbreaking development.