China’s oil imports surge to new heights, reaching near-record levels, while domestic production also rises. June saw a staggering 45.3% year-on-year increase in oil imports, hitting the second-highest monthly figure ever recorded. Refiners are stockpiling despite weak local demand, with imports totaling 12.67 million barrels per day, marking a significant boost compared to last year’s pandemic lockdown situation.
This surge in oil imports follows Beijing’s removal of curbs on independent refiners, also known as teapots. The Chinese government had previously imposed substantial import quota cutbacks on private oil refiners, which significantly reduced total imports. The crackdown aimed to curb malpractices like tax evasion, fuel smuggling, and violations of environmental rules. Additionally, it sought to regain control of China’s crude refining sector from private refiners, handing it back to state-owned refineries. This move reflects a broader pattern of Beijing tightening its grip on powerful industries to safeguard party politics.
China’s natural gas imports have also seen an uptick, with liquefied natural gas (LNG) imports reaching a five-month high in June. However, weak demand in Europe has put a cap on prices. China imported 5.96 million metric tons of LNG last month, a 28% increase from a year ago. Despite the rise, spot prices declined to $9.00 per million British thermal units (mmBtu), marking an 87% drop from its record high in August, and the lowest since April 2021.
Meanwhile, China has been boosting its crude oil output, currently producing 4.3 million barrels a day, making it the world’s fifth-largest producer.
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