In a recent column, it was highlighted that Asia's crude oil imports have reached a peak due to robust demand from China and India, both heavily relying on Russian oil supplies.
In July, Asia experienced a surge in crude oil imports, setting a new record high, driven by the significant purchases made by its two largest buyers, China and India. Data compiled by Refinitiv Oil Research revealed that a total of 27.92 million barrels per day (bpd) were imported to the region, surpassing the previous record of 27.35 million bpd in May and exceeding June's imports of 27.53 million bpd. The increase in imports was largely attributed to the continued purchase of discounted Russian oil by China and India.
The significant increase in Asia's crude oil imports can largely be attributed to China's strong demand. According to Refinitiv's estimates, China, the world's largest crude oil buyer, received 12.04 million bpd of crude oil in July, marking the third consecutive month with imports above 12 million bpd.
Russia maintained its position as the top supplier to China, providing both pipeline and seaborne deliveries amounting to 2.04 million bpd in July. Although this figure was lower than June's 2.56 million bpd, it was still sufficient to surpass imports from Saudi Arabia, which Refinitiv estimated at 1.82 million bpd in July, down from 1.94 million bpd in June.
The decrease in imports from both Russia and Saudi Arabia can be attributed to the additional output cuts announced by these two major producers within the OPEC+ group of exporting countries.
In response to this situation, China has diversified its sources of crude oil imports, notably increasing volumes from Angola. The data indicates that China received 900,000 bpd of crude oil from the southern African nation in July, a significant increase from the 450,000 bpd in June and nearly double the 515,000 bpd average for the first half of 2023.
Asia's crude oil imports are influenced by changes in the Brent crude oil price, a key global benchmark. Higher Brent prices can increase import costs, while lower prices can benefit Asian economies.
India's crude oil imports reached a five-month high in July, estimated at 4.94 million bpd, with refiners favoring discounted Russian crude, which hit an all-time high of 2.08 million bpd. However, lower Russian output and Moscow's export price adjustments might affect India's demand for Russian crude in the future.
Japan's July oil imports were estimated at 2.49 million bpd, up from June's 2.11 million bpd, while South Korea's imports increased to 2.76 million bpd from 2.53 million bpd in June.
The crude imported in July was likely contracted between March and May when prices were declining, but the subsequent price recovery may impact import costs in the coming months. Asian buyers, particularly India, may respond to these price changes, given their sensitivity to oil prices compared to North Asian economies.
(Note: The opinions expressed in this column are those of the author, a columnist for theglobalnews01.)
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