Crude shipments from the Kingdom dropped 21% last month not because China’s voracious appetite for oil has reduced but because of wide-scale maintenance work at refining sites across the country
China’s oil imports from Saudi Arabia fell by over fifth in May – compared to the same month last year – with refinery outages largely blamed.
Saudi still retained its top ranking among suppliers for a ninth month in a row, customs data showed on Sunday, with shipments from the kingdom 7.2 million tonnes last month, or 1.69 million barrels per day (bpd), data from the General Administration of Chinese Customs showed.
That compared to 6.47 million tonnes in April and 9.16 million in May 2020.
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Imports from second-largest supplier Russia also dropped from a month earlier, to 5.44 million tonnes, or 1.28 million bpd.
The scale-backs by the top two exporters were in line with a steep annual decline of nearly 15% to this year’s lowest total crude imports into China.
Maintenance at refineries across the country had limited consumption but refinery demand is expected to rebound in the coming months, analysts said.
About 1.2 million bpd of China’s refining capacity was offline in May, up from 1 million bpd in April, according to Refinitiv analysts.
SECURITY RAMP-UP
China’s crude arrivals are expected to reach 11-12 million bpd in the third quarter and refinery runs rise by 0.5 million bpd from the second quarter, Mukesh Sahdev, senior vice-president of Rystad Energy said.
The Chinese government has also been ramping up scrutiny of the oil industry by imposing taxes on key blending fuels and investigating crude imports at state energy giants and independent refiners.
The tax crackdown is expected to hit demand of bitumen blend, mostly shipped from Malaysia, which analysts say is based on heavy crude from Venezuela and Iran.
Imports from United Arab Emirates arrivals fell 25% last month from year-ago levels.
IRANIAN SHIPMENTS
That is seen as a possible sign that Iranian oil shipments were slowing further from peaks early this year amid talks between Tehran and world powers to revive the nuclear deal the United States exited in 2018.
It’s claimed Iran has sold record amounts of oil since late 2020, disguised as crude oil from other origins that included the UAE and Oman.
Chinese customs recorded zero imports from Iran for a fifth month in a row.
The customs’ database also showed a 3.6% year-on-year rise to 1.04 million tonnes of imports from Malaysia, which traders said has been a key trans-shipment point for heavy crude blends from Venezuela.
VENEZUELA LOADS
Official data has consistently recorded zero imports from Caracas since October 2019, as dominant state importer CNPC halted loading, fearful of US sanctions.
Venezuela oil, however, had slipped into China, passed on as Malaysian bitumen blend after trans-shipments in Malaysian waters, analysts said.
Imports from the United States reached 1.07 million tonnes, nearly doubled the level a year earlier.
- Reporting by Reuters
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