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Column: Asia’s crude oil imports recuperate on European winter demand hopes: Russell

LAUNCESTON, Australia, Oct 10 (Reuters) – Asia’s imports of crude oil recovered in September, however the enhance is probably going extra a mirrored image of expectations of improved product demand from Europe over the approaching winter somewhat than an indication of financial energy.

The world’s top-importing area introduced in 26.58 million barrels per day (bpd) of crude in September, up from 24.90 million bpd in August, in response to knowledge compiled by Refinitiv Oil Analysis.

It was the third-highest month for imports this 12 months and probably the most since Could’s 26.62 million bpd.

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However a breakdown of the September imports reveals that simply two international locations accounted for 85% of the rise from August and this was primarily as a result of they elevated refinery utilization after upkeep durations.

China, the world’s largest oil importer, noticed arrivals of 10.19 million bpd, up 650,000 bpd from August, and the strongest month since Could.

Singapore noticed imports rise to 1.57 million bpd in September, up from 790,000 bpd in August, when refinery processing charges have been simply 47.7% of capability.

Put collectively, the rise in September imports for China and Singapore was 1.43 million bpd, which is 85% of the acquire of 1.68 million bpd from August’s whole for the entire of Asia.

Different main Asian crude importers confirmed comparatively regular imports for September, with India, the continent’s second-largest purchaser, touchdown 4.11 million bpd, barely down from 4.15 million bpd in August.

Japan imported 3.14 million bpd in September, up from August’s 2.94 million bpd, whereas South Korea imported 2.70 million bpd, down from 3.05 million.

The general enhance in Asia’s crude oil imports in September comes because the area’s refiners construct inventories forward of the northern winter, and as extra vegetation return from upkeep.

There are expectations that Europe could name on Asia for refined merchandise, particularly diesel, throughout winter because the continent plans to cease imports of Russian crude in December, and of merchandise two months later.

Europe’s product imports from exterior the area have been 4.6 million tonnes in September, which Refinitiv stated was a two-year excessive.

Of that 4.6 million tonnes, 1.64 million got here from Russia, which is classed as exterior Europe by Refinitiv.

Assuming Europe goes forward with its import bans on Russian crude and merchandise, it means the continent will probably be searching for round 1.6 million tonnes a month from elsewhere, with Asia, and significantly China, greatest positioned to offer additional gasoline given the continent’s surplus refining capability .


China has elevated its export quotas for the remainder of the 12 months by 15 million tonnes, however it’s unlikely that precise exports will attain that stage given delivery constraints.

Nonetheless, it is probably that China will enhance exports of refined fuels, which can result in some restoration in its crude oil imports.

But it surely’s additionally doable that China makes use of up crude inventories constructed up this 12 months to spice up product exports, with the nation having added about 1.46 million bpd to stockpiles within the first eight months of 2022, as refinery processing fell by greater than imports. learn extra

Boosting product exports however not crude imports would supply an financial increase to China, which is struggling to fireside up its financial system after a sequence of strict COVID-19 lockdowns and funding points in its key property building sector.

It will additionally enable Beijing to ship a message to the OPEC+ group of exporters that China is displeased with final week’s announcement by the group to chop 2 million bpd from their output quotas, a transfer broadly seen as an try to preserve oil costs above $90 a barrel whilst the worldwide financial system heads in the direction of a possible recession.

General, the acquire in Asia’s crude imports in September is unlikely to be the beginning of a sustained run of sturdy import numbers.

The looming financial slowdown and the influence of the sturdy US greenback, which is holding retail costs near report highs in lots of Asian international locations, might be extra of a drag on demand than any increase from elevated shipments of merchandise to Europe.

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Modifying by Sam Holmes

Our Requirements: The Thomson Reuters Belief Ideas.

Opinions expressed are these of the writer. They don’t replicate the views of Reuters Information, which, beneath the Belief Ideas, is dedicated to integrity, independence, and freedom from bias.

Clyde Russell

Thomson Reuters

Clyde Russell is Asia Commodities and Vitality Columnist at Reuters. He has been a journalist and editor for 33 years protecting all the things from wars in Africa to the sources increase and its present struggles. Born in Glasgow, he has lived in Johannesburg, Sydney, Singapore and now splits his time between Tasmania and Asia. He writes about developments in commodity and vitality markets, with a specific deal with China. Earlier than turning into a monetary journalist in 1996, Clyde lined civil wars in Angola, Mozambique and different African hotspots for Agence-France Presse.


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