SINGAPORE – November crude imports into Asia are expected to be at an all-time high, supported primarily by demand from the region’s biggest consumers – China and South Korea.
Preliminary data from Refinitiv Oil Research, a unit of the London Stock Exchange Group, assessed total crude flows into the region at 28.4 million barrels per day (bpd), up 11 per cent from the previous month.
Crude imports to China, the world’s second-largest economy, were at an 11-month high of 11.72 million bpd, up nearly 12 per cent as compared with October, Refinitiv’s data showed.
Refinitiv’s data on China is typically published ahead of official data releases from Beijing.
South Korea imported 3.33 million bpd, up from the previous month’s 2.53 million bpd.
Mr Yaw Yan Chong, director of oil research at Refinitiv, said one reason for the upswing in imports to China could be the commercial start-up of two greenfield refineries – PetroChina’s 400,000 bpd Guangdong Petrochemical and the 320,000 bpd Shenghong Petrochemical facilities.
He added that the looming uncertainty over supplies and the recent expansion of export quotas added support for the hefty purchases seen by China and South Korea.
“Energy security remains a concern for many countries, not just here in Asia, and with the Russia ban on crude looming, the market has a lot to deal with, and that includes the recent cuts by the Organisation of Petroleum Exporting Countries to production,” said Mr Yaw.
The Group of Seven (G-7) – made up of the world’s largest developed economies, including the United States – the European Union and Australia are slated to implement the ban on seaborne exports of Russian oil on Dec 5, as part of sanctions to punish Moscow for its invasion of Ukraine.
A second ban on petroleum products is due to be rolled out in February 2023.
Despite this, Opec and its alliance of producers, including Russia, announced a two million bpd cut in production. It drew widespread criticism from western governments, with the US calling the surprise decision short-sighted.
“I don’t believe anyone expected Opec+ to make such a deep cut. It was untimely and certainly did nothing to ease a market that is on edge,” said Mr Yaw.
“Fundamentally, this market remains tight and if there are any disruptions to production or on the supply chain, we could see prices catapult back up over US$100, and that will only add to inflationary pressures, which is why you see China stocking up.
“No one knows what 2023 is going to look like from a supply perspective.”
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