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Page added on May 11, 2015
China world’s biggest oil importer
China overtook the US as the world’s biggest importer of crude oil in April, the culmination of a seismic shift in global energy flows over the past decade.
Chinese customs data showed crude oil purchases from overseas hit a new high of 7.4m barrels a day in April, equivalent to roughly one in every 13 barrels consumed globally and topping US imports of 7.2m b/d. The US routinely exports about 500,000 b/d.
While China’s imports are not expected to consistently surpass those of the US until the second half of this year, the move illustrates how the US shale revolution has cut the country’s reliance on oil from overseas — and how China’s demand has grown even as its economy slows.
Colin Fenton, managing partner at Blacklight Research, said China’s imports increased as it stockpiled oil. “It’s begun,” Mr Fenton said. “China’s crude imports have been above trend in four of the past five months.”
The jump in imports last month was partly down to higher shipments from Iran, according to consultancy Energy Aspects. China Oil also bought a record number of Oman and Abu Dhabi crude cargoes last month, in a public trading window that helps determine the region’s benchmark prices.
“Iran may be offering more discounts on its oil as part of an effort to increase ties with Chinese oil companies,” said Amrita Sen at Energy Aspects. “Iran is keen to secure more Chinese investment.”
China’s state-backed traders, including Unipec and China Oil, are taking a much more visible role in the global crude market. They have steadily built up more sophisticated operations to compete directly with established trading desks at western oil companies like BP and Royal Dutch Shell, banks like Goldman Sachs, and commodity dealers like Vitol and Glencore.
In the US, higher prices and more efficient motor vehicles curbed consumption in the aftermath of the financial crisis, while the surge in shale oil output over the past three years has reduced imports.
Producers are now chafing at government restrictions on US crude exports that date back to the oil shocks of the 1970s. “It makes no sense that other countries can sell their crude into US markets, while US crude is essentially landlocked,” said Doug Suttles, chief executive of the Encana oil and gas company.
US imports could rebound in the short term, traders say, with fuel demand boosted by the collapse of oil prices to $65 a barrel. The price fall has also sharply reduced drilling activity in US shale regions such as North Dakota.
But the long-term trend is in China’s favour. The country is adding more refining capacity with its economy still growing at more than 7 per cent a year.
In 2013 China overtook the US in combined imports of crude and refined oil products like gasoline and diesel.
“The world has a lot of oil,” one senior trader at a Chinese firm said. “And we need a lot of oil.”
Traders say China no longer passively accepts the prevailing market price, but is intimately involved in how it is set. How much oil it buys from West Africa or the Middle East affects prices from Europe to the US Gulf Coast, and is now as closely-watched as weekly US government data on energy supplies was a decade ago.
“What we see now is the pricing of West African crudes and Middle Eastern grades determines how oil flows around the world,” a senior oil trader at a bank in Houston said. “And that’s all down to Asian demand.”
China’s emergence as the top crude importer may also influence the relations of Beijing and Washington with producers in the Middle East.
9 Comments on "China world’s biggest oil importer"
TIKIMAN on Mon, 11th May 2015 6:03 am
The Chinese need all that oil to keep driving slow in the left lane.
Don on Mon, 11th May 2015 7:20 am
https://www.youtube.com/watch?v=LLuaPZWkvZ0
Ralph on Mon, 11th May 2015 8:40 am
This may be a blip. Chinese are still filling their strategic reserve, it may soon be full and the rest of their economy is looking very shaky. That said, they are still adding 20M cars a year to their fleet.
The US shale production is about to nosedive, and SUV sales are booming again, so US imports are likely to rebound a bit.
What happens in the medium term is anybody’s guess. How much will the slowdown in shale drilling and the resultant writedown of all those junk bonds impact on US economic activity? Will China enact their own version of QE to keep demand up, or have we reached peak Cargo Cult investment? How many empty cities does one nation need?
Will Greek default trigger implosion of the Eurozone economics or will another OPEC nation go into failed state mode?
We live in interesting times.
Davy on Mon, 11th May 2015 8:49 am
Don’t hold your breath here folks. BAU is ending and with that end will be a rebalance of consumption and production of oil. The US fracking nonsense is doomed requiring increased oil imports. China’s business model is a failure meaning lower consumption.
China’s business plan is based on an export lead economy. It has driven world consumption and the combination of world consumption of Chinese exports and Chinese imports of world commodities has kept this cycle going for the last few years. This with the injections of vast amounts of liquidity that was nothing more than a vast wealth transfer. The pie did not grow only the size of the theft from the many for the few.
World consumption is now sputtering and with it China’s growth. This will be a knock on effect to the world economy and China. IOW a vicious cycle down of production and consumption destruction. There is momentum and interia to change but the physics is clear. The real systematic dynamics are clear. Forget the pseudo-science of economics with what it is preaching. It is preaching BAUtopianism of the hopium of human exceptionalism through technology and markets to overcome entropic decay.
The sad truth is we have squandered a huge endowment of many resources on trying to extend BAU a few years more since the 08 crisis. This has resulted in a huge, huge, and huge global mal-investment across the board but most notably in the major economic powers the US, China, Japan, and Europe who have repressed rates and monitarized debt to create bubbles. These bubbles were nothing more than mal-investment at a global level. Along with the bubbles came the whole waste stream of more carbon.
The global malinvestment bubble post 08 crisis did buy us some time to enjoy the comforts of BAU a little longer. China’s growth is over. The US’s growth is over. These oil production and consumption trends that are extrapolated into the future are fantasy and goal seeking. Just disregard them as delusions of grandeur and greatness us humans feel through BAU.
BobInget on Mon, 11th May 2015 10:00 am
When China takes every barrel of Ecuadorian
exported oil, a few traders will take note.
As China keeps demanding more Venezuelan oil
for debt service, the US, even Plantagenet, will notice a one million barrel p/d shortfall.
While the US supports Saudi Arabian led oily collation against pitiful Yemen, China remains KSA’s big customer.
While everyone looks at China’s ‘Big Gulp’ few are paying attention to India’s new oil and gas boomlet.
http://www.presstv.ir/Detail/2015/05/01/408925/iran-india-oil-import-cooperation-energy-sanctions
Irving Berlin set out good foreign policy advice
in “Annie, Get Your Gun”
Those girls with fancy umbrellas always get fellas
But a man never trifles with gals who carry rifles
Oh you can’t get a man with a gun.
China and India with a 2.4 billion combined population, “need a lot of oil”, Have one aircraft carrier between them.
Plantagenet on Mon, 11th May 2015 10:22 am
I wonder when Bobinget will notice that we are currently in an oil glut.
Its OK to fantasize about a “one million barrel p/d shortfall”—-but lets not lose sight of current reality.
joe on Mon, 11th May 2015 10:29 am
What we are seeing in China is that city people are growing wealthy on export trade. 7% growth is not domestic it’s growth being turned into profit. Right now profit is being saved and re-exported into London and Europe etc. Wealth gaps in China are massive, but there is a kind of ‘Chinese dream’ keeping social unrest at bay. Tacit acceptance of religion in China and state security is keeping things quiet right now. But that cannot last. At some point millions of poor Chinese farmers are going to roll their tractors into peking and demand a share in the new prosperity. There will have to be a New Deal for China if the slow down even a bit.
Davy on Mon, 11th May 2015 10:41 am
Bobby, does your vision of the mighty false dragon sucking all remaining free global oil sources include the age old ability of humans to say NO?
China has no ability to enforce their contracts beyond a BAU setting. China is also likely to make a hard landing soon greatly reducing consumption. What do you think will happen to China’s exports when the rest of the world faces shortages?
I will acknowledge your BAU China consumption and marginal growth if you acknowledge China cannot have what it does not own post BAU. You can be sure if Venezuela collapses someone that does not like the cozy MADuro relationship with China will tell China to go elsewhere.
Perk Earl on Mon, 11th May 2015 2:27 pm
Hey guys, this is a category we want to lose. We don’t want to win the biggest oil importer country ranking. Oh way to go China! (instead of “Oh way to go, Ohio”).