China Returns to Oil Market as Middle East Disruptions Squeeze Supplies
China has returned to the global oil market after months of relying on its own crude stockpiles. This move comes as Iran's disruptions and Saudi Arabia's suspended oil loadings have squeezed supplies, pushing oil prices up.
According to the US Energy Information Administration, China's crude imports averaged 8.1 million barrels per day during the second quarter, down 32% from the first quarter. However, in August, Chinese crude imports rose 6.2% from July to roughly 9 million barrels per day.
Energy analyst David Blackmon notes that oil prices will likely remain on an upwards trajectory until at least one of the three major Middle East supply limiters are resolved, which include Saudi Arabia's shutdown of its East-West pipeline, the Houthi threat to shipping traffic via the Bab el Mandeb Strait, and the Islamic Revolutionary Guard Corps (IRGC) threat to traffic via the Strait of Hormuz.
Chinese refiners have been consuming crude faster than imports and domestic production are supplying it, resulting in an estimated inventory draw of roughly 640,000 barrels per day. However, Stuart Turley warns that refineries are running hot and any disruption could lead to a critical issue.