China’s dependence on crude oil imports has been growing in recent years as its domestic production has faltered, and the world’s top oil importer covered 73.4 percent of its oil demand with imported oil in the first half of 2020.
According to Chinese data, analyzed by Radio Free Asia’s Michael Lelyveld, China has been buying record volumes of crude oil over the past months in order to bolster its energy security, especially at a time when its relations with the United States are deteriorating.
Over the past decade, China’s oil production has been falling while its oil demand has been soaring, increasing Beijing’s dependence on sourcing oil from abroad.
The Chinese authorities have recently launched a plan to boost energy security by ordering state oil giants to increase domestic oil production.
In the first half of 2020, China’s crude oil production did increase, by 1.7 percent year on year, according to data from the National Bureau of Statistics of China. The growth in production between January and June, however, was 0.7 of a percentage point slower than that of the first quarter, the bureau said.
At the same time, in the first half of the year, China’s imports of crude oil jumped by 9.9 percent compared to the first half of 2019, despite the devastating coronavirus pandemic that locked down China for weeks. The growth in imports between January and June was 4.9 percentage points faster than between January and March.
Record Chinese crude oil imports over the past few months have supported still weak global oil demand and instilled confidence in the market that the demand recovery will continue.
In June, China smashed its record from a month earlier and imported an all-time high of 12.9 million bpd of crude, more than 1.5 million bpd higher than the imports in May and a 34-percent jump compared to June last year, according to Reuters calculations of data from China’s General Administration of Customs.
But the Chinese buying spree may be coming to an end, as oil is not as dirt cheap as it was in April when most cargoes that arrived in China in recent weeks were contracted, and as China is estimated to have amassed large crude inventories in commercial and strategic storage.