Oil prices have recently declined, with reports indicating a drop to near their lowest levels since September. This downturn is largely attributed to weak economic data from China, the world’s largest oil importer, which has deepened concerns about global demand. Specifically, China’s economic indicators suggest deflationary pressures and reduced fuel demand, compounded by a period of refinery maintenance. This has contributed to a bearish outlook for oil, with Brent crude prices falling below $70 per barrel in recent trading sessions.
On the supply side, OPEC+ (the Organization of the Petroleum Exporting Countries and allies like Russia) is navigating its own challenges. The group recently confirmed plans to increase output by 138,000 barrels per day starting in April, the first hike since 2022, aiming to unwind part of its 5.85 million bpd cuts. However, this decision has met with mixed reactions within the bloc—Russia and the UAE favor proceeding, while Saudi Arabia and others lean toward delay due to uncertainties over sanctions and tariffs. The market’s surprise at this move, coupled with fears of oversupply, has pressured prices downward. Some analysts suggest OPEC+ might pause or reverse this increase if market conditions worsen, reflecting a cautious approach to balancing supply and demand.
Saudi Aramco, the world’s largest oil exporter, cut its formula prices for April-loading cargoes into Asia with Arab Light now priced at $3.50 per barrel above Dubai, the first downward move in three months as the market anticipates the unwinding of OPEC+ cuts, OilPrice said.
In 2024, China, the world’s largest crude oil importer, saw its crude oil imports decline for the first time in two decades outside of pandemic-related disruptions. Official customs data indicates that total imports dropped by approximately 1.9% compared to 2023, reaching around 11.07 million barrels per day (bpd) or roughly 553 million metric tons for the year, down from 11.28 million bpd (563.99 million metric tons) in 2023.
This marked a significant shift from the record high set in 2023, driven by a combination of weaker economic growth, structural changes in energy consumption, and reduced refinery activity.
A key trend in 2024 was the stagnation of demand for traditional transportation fuels. Rapid electrification of China’s vehicle fleet, particularly the rise of new energy vehicles (NEVs) like electric and hybrid cars, displaced gasoline demand, which analysts suggest peaked in 2023 or 2024. Diesel demand also faltered due to a property sector crisis, lackluster exports, and the increasing adoption of liquefied natural gas (LNG) in trucking, displacing roughly 220,000 bpd of diesel in 2023—a trend that likely accelerated in 2024. Jet fuel demand grew, supported by recovering aviation, but not enough to offset declines in gasoline and diesel, leading to an overall peak in transport fuel consumption.
Refinery throughput mirrored this demand weakness, dropping to 14.13 million bpd in 2024, the first annual decline in over 20 years outside of 2022’s pandemic hit. This was a decrease from 14.2 million bpd in 2023, reflecting lower crude processing as refining margins narrowed and overcapacity persisted. Independent refiners in Shandong, a key refining hub, operated at just 53.66% capacity, down 8.3 percentage points from 2023, with some plants closing or relocating, further reducing import needs.
Despite the overall decline, import patterns shifted notably by supplier. Russia solidified its position as China’s top crude oil supplier, with imports rising 1% to a record 108.5 million metric tons (2.17 million bpd), up from 107 million tons in 2023. This increase, the third consecutive yearly rise, was fueled by discounted Russian oil following G7 sanctions and price caps post-2022 Ukraine crises, appealing to both state and independent refiners. Seaborne Russian imports were particularly strong, supported by a government stockpiling mandate. In contrast, Saudi Arabia, the second-largest supplier, saw exports to China fall 9% to 78.64 million tons (1.57 million bpd) from 1.72 million bpd in 2023, as higher Saudi prices lost ground to cheaper Russian and Iranian oil. Imports from Iran officially registered at zero due to sanctions, though analysts suspect significant volumes were relabeled via countries like Malaysia, which saw a 54% import surge to 1.1 million bpd in 2023—a trend likely persisting into 2024. Brazil’s exports to China rose 17% to around 755,000 bpd, while U.S. imports dropped sharply by 36%.
Monthly trends showed volatility. Imports fell 3.4% year-on-year in the first 10 months (10.98 million bpd), hitting a low of 9.97 million bpd in July—the weakest in nearly two years. However, a rebound emerged in August (11.56 million bpd) and November (11.81 million bpd), driven by lower oil prices earlier in the year (Brent dipped to $68.68 in September) and seasonal demand peaks. This suggests refiners capitalized on price dips to stockpile, with surplus crude averaging 1.15 million bpd in 2024, up from 760,000 bpd in 2023, peaking at 1.77 million bpd in November.
Looking at broader implications, China’s oil import decline reflects structural shifts—EVs now account for over 50% of new car sales, and LNG trucking is expanding—alongside economic challenges like a sluggish post-COVID recovery and trade tensions. The petrochemical sector, however, remained a growth driver, with demand for feedstocks like naphtha and LPG rising, though not enough to offset transport fuel losses. Analysts diverge on the peak import timeline: some see 2024 as the tipping point (around 11.2 million bpd), while others project slight growth to 2026 before a plateau, contingent on economic stimulus and new refinery capacity.
In summary, 2024 marked a pivotal year for Chinese oil imports, with a 1.9% annual decline to 11.07 million bpd, a shift toward discounted Russian oil (2.17 million bpd), and reduced reliance on Saudi Arabia (1.57 million bpd). Trends point to a peaking of traditional fuel demand, offset by petrochemical needs and strategic stockpiling, setting the stage for a potential stabilization or modest rebound in 2025 if economic conditions improve and prices remain favorable.
/X, OilPrice/