Oil prices are continuing to climb despite fears of demand destruction and falling imports from China. According to the IEA, oil demand could increase to the tune of 500,000 bpd due to the energy crisis driving gas-to-oil switching. Oil markets unfazed by falling imports from China, OilPrice said.

China drops independent import quotas for first time since 2015.Having issued the much-anticipated fourth batch of import quotas for independent refiners, Chinese authorities have reduced the total volume of crude to be imported for the first time in six years, despite at least 1 million b/d capacity coming online this year. The 2021 total of import allowances, at 177 million tons, is 7.4 million tons lower than that of 2020.  

The ongoing rally in natural gas prices continues to drive gas-to-products switching and driving oil prices higher. In Asia, there is a counter-seasonal mini-renaissance of HSFO utilization. Concurrently, demand for crude remains strong, with OECD stockpiles recording a week-on-week decline. Oil prices did come under pressure on Thursday from data that showed weakening Chinese imports, but bullish sentiment retook markets on Friday. 

China approves new import terminal for Sinopec. China is already the world’s largest LNG importer, and inflows there should increase further as Chinese authorities approved the construction of a 6.5 mtpa capacity LNG terminal in Longkou, Shandong, to be operated by state oil company Sinopec. 

Chinese majors woo US LNG exporters.Several Chinese majors including Sinopecand CNOOC are in talks with US LNG exporters, mainly Cheniere and Venture Global, to conclude long-term supply contracts as current LNG prices highlighted the deficiencies of spot trades. 

Turkey seals new gas supply deal with Azerbaijan. Turkey has signed a three-year gas supply contract with Azerbaijan that would see the delivery of 11 billion cubic meters until the end of 2024, coming 6 months after the expiry of the erstwhile Shah Deniz-1 deal. 

Brazilian president wants to privatize Petrobras. Unable to control runaway fuel prices, Brazilian President Jair Bolsonaro stated he is inclined to privatize the state oil company Petrobras, following the 2019 privatization of the Vibra fuel distribution company and the upcoming 2022 Eletrobras denationalization, OilPrice reports.