China’s crude oil imports are set to rebound in November after sharp price cuts boosted demand for Iraqi and Saudi oil, offsetting a drop in Iranian supply, according to analysts, traders and shiptracking data.
A slump of 17% in global oil prices in the third quarter also sparked Chinese stockpiling demand while refiners prepare for higher seasonal fuel consumption ahead of the Lunar New Year holiday staring in late January, analysts say.
The November rebound in volumes for the world’s top crude oil importer comes after six consecutive months of annual declines as Chinese refiners struggled with weak margins and run cuts.
China’s seaborne crude oil imports are forecast at around 11.4 million barrels per day (bpd) in November, the highest level since August 2023，Kpler data showed.
Vortexa expects China’s November seaborne crude oil imports at about 10.7 million bpd, the highest this year, citing growth of 20% month-on-month growth in Middle Eastern supplies to China, led by Saudi and Iraqi oil.
Chinese buyers, including Asia’s largest refiner Sinopec 600028.SS and PetroChina 601857.SS, increased crude purchases around August for November-delivery shipments, gearing up for refinery restarts after autumn maintenance and bracing for a seasonal spike in demand for refined products, said Xu Muyu, a senior Kpler analyst.
Imports from Saudi Arabia and Iraq rebounded in November following sharp cuts in official selling prices (OSPs) by Saudi Arabia and Iraq for October-loading cargoes that will arrive in November and December, said Xu and several trade sources.
Saudi Arabia and Iraq and are set to be the top suppliers of seaborne crude to China this month, followed by Russia, Kpler data showed.
That offset a drop in Iranian oil supply to 1.08 million bpd, from 1.6 million bpd in October, the data showed.
Loadings at export terminals including Iran’s Kharg Island dropped significantly in October from September, with ship owners concerned about possible Israeli attacks on Iranian oil facilities that did not happen.
The fall in Brent crude LCOc1 under $70 per barrel in early September, the lowest since December 2021, also created an opportunity for China to resume stockpiling. O/R
China asked state oil companies this year to add 8 million metric tons, or nearly 60 million barrels, of crude to the country’s emergency stockpiles to boost supply security.
Stockpiling in the eastern province of Shandong, where most refiners are located, started in late September with at least 5 million barrels of Russian crude and 3 million Middle East crude imported over six weeks, Vortexa analyst Emma Li wrote in a report.
More Russian ESPO crude is likely to enter China’s strategic petroleum reserve (SPR) in coming weeks, she added.
In addition, some independent refiners have also bought crude to use up their import quotas before year-end, traders said.
In a sign of more imports in coming months, Shandong-based Landbridge Petrochemical made a purchase of Angolan crude including Pazflor and Mostarda from TotalEnergies for January delivery, they said, after prices for the West African oil dropped to levels similar to Russian ESPO.
Landbridge did not immediately respond to Reuters’ email request for comment.
Source: Reuters (Reporting by Siyi Liu, Chen Aizhu and Florence Tan; Additional reporting by Beijing Newsroom; Editing by Clarence Fernandez)