Asia’s crude oil imports hit two-year low

Asia’s crude oil imports fell to their lowest level in two years in July, driven by weak demand in China and a slowdown in India. According to LSEG Oil Research, the region imported 24.88 million barrels per day (bpd) last month, a 6.1 per cent decrease from June and the lowest since July 2022.

The average import rate for the first seven months of 2024 was 26.78 million bpd, down by 340,000 bpd compared to the same period in 2023.

This decline challenges forecasts for robust growth in regional oil demand. OPEC+ had predicted a global oil demand increase of 2.25 million bpd for 2024, with China contributing 760,000 bpd, India 230,000 bpd, and the rest of Asia 350,000 bpd.

However, the International Energy Agency (IEA) expects global oil demand to grow by 970,000 bpd, with China accounting for about 388,000 bpd of this increase. Moreover, current data suggests China’s oil imports are falling short of these forecasts.

If China’s July imports of 10.53 million bpd are confirmed, the year-to-date average would be around 10.98 million bpd, representing a 2.1 per cent decline from the same period in 2023. Additionally, LSEG reports that China is expected to add 60 million barrels to its Strategic Petroleum Reserve (SPR) by early 2025, contingent on favourable crude prices.

This indicates that a significant recovery in demand is unlikely without a dramatic shift in economic conditions. Moreover, any increase in oil demand may be constrained by the growing popularity of electric vehicles.

In India, imports dropped to 4.54 million bpd in July from 4.76 million bpd in June, influenced by the seasonal monsoon. However, imports are expected to rebound after the wet season due to strong economic growth and infrastructure development.

Overall, Asia’s crude oil demand remains subdued, impacted by sluggish economic growth and weak refining margins amid high crude prices.

Attribution: Reuters