This is down from a peak of 760kbd that they projected back in July, but their numbers are still out of sync with the reality. In the first nine months of this year, China’s imports averaged just under 11 million b/d, which is 350, 000 b/d less than in the first nine months of 2023.
How much risk premium is there in today’s oil price?
One key question how much remains priced in because of the potential for conflict in the Middle East disrupting oil production or exports. If Israel is persuaded not to attack Iranian facilities, some of that premium could come off. However, there’s still a significant premium baked into the price, so if it weren’t there, oil prices would likely be weaker than they are now.
Outlook for China oil imports?
China has been importing significantly more oil than they’ve processed, and that trend has been accelerating. I’d expect to see some recovery in Chinese imports in October and November. This pattern is largely price-driven: when prices are softer, China buys more. Chinese refiners likely want to maintain substantial stockpiles as a hedge against the possibility of a larger conflict in the Middle East, in which case they would draw from inventories and significantly cut imports. If they see the price testing or dropping below $70, I’d expect them to import more, and as long as nothing significant happens in Middle East, prices are likely to keep testing lower rather than moving higher. Keep in mind that if China buys now in mid-October, that oil won’t arrive in China until January.