China Re-Enters Oil Market Amid Middle East Disruptions
China is re-entering the global oil market after months of relying heavily on its own crude stockpiles, adding to demand as disruptions in the Middle East drive up prices.
The world's largest crude importer, China helped cushion global markets earlier this year by cutting back on purchases due to the war in the Middle East disrupting flows through the Strait of Hormuz. Chinese crude imports averaged 8.1 million barrels per day during the second quarter, down 32% from the first quarter.
However, recent data shows that Chinese crude imports rose 6.2% in August to around 9 million barrels per day after jumping 22% in July. The country's independent refiners are also seeking alternative supplies from West Africa, Canada, and South America due to disruptions and sanctions.
Energy analyst David Blackmon told the Daily Caller News Foundation that oil prices will likely remain high until at least one of the major Middle East supply limiters is resolved. He cited Saudi Arabia's shutdown of its East-West pipeline, Houthi threats to shipping traffic via the Bab el Mandeb Strait, and IRGC threats to traffic via the Strait of Hormuz.
Refined products are a critical point in the global markets, according to Stuart Turley, president and CEO of Sandstone Group. He warned that any refinery running hot will break down, and that it's not just a matter of crude supplies but also refined product availability.