Chinese refiners are expected to slow the drawdown of oil from reserves this month as crude imports recover, according to Energy Aspects. More overseas crude is anticipated to arrive from November, enabling China to preserve its stockpiles buffer against further supply disruptions. Recent purchases of Iraqi and other Middle Eastern barrels for delivery next month indicate refiners are already securing more supplies. China’s massive inventories have provided a crucial cushion against wartime disruptions, allowing the world’s biggest oil importer to sustain refinery runs without chasing more expensive replacement barrels. Now, as Middle Eastern producers offer more spot cargoes, state-owned and private refiners are snapping them up, though a recent surge in attacks has cast uncertainty over whether all the shipments will arrive.
“We expect China’s crude destocking to slow at least in October,” said Jianan Sun, an analyst at Energy Aspects. “We see upside risks to Chinese crude imports as Saudi Aramco ramps up exports via STS transfers outside the Strait of Hormuz,” he added, referring to ship-to-ship transfers. The drawdown of about 147 million barrels since the Middle East war began depleted China’s crude inventories to 1.09 billion barrels, according to Vortexa Ltd. Stockpiles shrunk by the most since 2020 in September, with state-owned refiners leading the offtake as ship-to-ship transfer bottlenecks around Hormuz delayed incoming cargoes.
China’s stockpiles plunged to 1.18 billion barrels as of Oct. 11, the lowest in 16 months, according to Kayrros, the Paris-based energy analytics firm part of Energy Aspects. While national inventories still remain sizable, the squeeze is more acute among private refiners. Some independent processors could exhaust their inventories by the end of this month, risking run cuts unless they secure fresh supplies. Meanwhile, China’s oil imports are poised to rise. Over the next three months, 96 supertankers capable of carrying about 2 million barrels each are due to arrive — the most since the Iran war began in late February, according to tanker-tracking data compiled by Bloomberg.
Refiners have stepped up spot purchases after Beijing issued fresh crude import quotas to private processors. Despite the recent increase in Iranian attacks on ships, forcing more empty supertankers headed for loading to turn away from the Persian Gulf, the region’s top producer Saudi Arabia has said its ability to supply energy remains resilient. “A faster recovery in Saudi exports could allow Chinese state-owned refiners, particularly Sinopec, to use additional Saudi crude to replenish commercial inventories drawn earlier this year by March 2027,” EA’s Sun said.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing