China is preparing to replace Russia in the export of refined petroleum

The demand for oil in China is picking up and several refineries are planning a considerable increase in processing volumes, according to Reuters , also because from February, at least in theory, the import of Russian semi-finished oil products into the EU will stop and some will prepare to take advantage of it.

According to these sources, at least three state-owned and one private refineries plan to increase processing volumes by 10% starting next month, in anticipation of greater demand for fuels, especially from abroad.

Europe is an obvious source of this increased demand, following the entry into force of the Russian crude oil embargo in December and the subsequent fuel import embargo in February. Currently, European buyers continue to import from Russia to stock up ahead of the embargo, but once this goes into effect they will have to look for alternatives and China is one of them.

In anticipation of this increased demand, Chinese refiners expect the government to issue another batch of fuel export quotas for up to 15 million tons, Reuters sources said. "We are increasing volumes next month to prepare for a possible export opening, although no one has a clear idea of ​​how large the opening would be," an official at a state-owned refinery told the news agency. "I believe that freight rates to China have strengthened on the hope of a recovery in Chinese demand … even the rumor of a further large amount of product exports in the fourth quarter fueled the optimism of the market," he told Reuters a Vortexa Analytics analyst.

Meanwhile, China is also increasing its oil imports, with a daily average of 9.5 million bpd in August, a marked improvement on July, although still below the average oil import rate for August 2021. .

As China's demand for oil increases, transportation tariffs will also rise, as the country is increasing its oil purchases from around the world. According to Refinitiv data cited by Reuters, the fare for a Very Large Crude Carrier trip between the Gulf of Mexico or the Middle East to China has risen to $ 10 million.

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The article China is preparing to replace Russia in the export of refined petroleum comes from .

This is a machine translation of a post published on Scenari Economici at the URL on Thu, 22 Sep 2022 16:24:46 +0000.