China’s ups second batch of crude import quotas to make up for a small first batch

China’s commerce ministry has approved 111.82 million mt in non-state imports of crude oil in a second batch of quotas for this year, market intelligence firm JLC reports, citing official sources.

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According to JLC, this is an increase of 112% compared to the same batch in 2022, which was around 52.69 million mt.

This second crude quota comes shortly after a small 20 million mt quota in China's first batch to independen refiners. That first quota was much lower than the 107.4 million mt allocated in the first quota last year. Combined, the two first quotas for this year were 19% lower than last year.

However, the combined quotas for this year fall 18.5% behind the first two batches of 2022. A large part of this shortfall can be attributed to the extremely low crude oil import quota of 20 million mt granted in the first batch, compared to a massive 107.4 million mt in the first batch of 2022.

“The surge [in the second batch] was because China set a very small first-batch 2023 quotas, and much earlier than usual in case independent refiners might need them,” writes JLC.

Based on JLC’s data, 44 Chinese refineries have received quotas in the second batch, with the highest share going to Zhejiang Petroleum and Chemical at 20 million mt.

Since China has reopened its international borders, markets are predicting a strong rise in demand. S&P Global analysts have predicted oil demand from the world's top importer to reach 15.7 million b/d this year.

In addition, Chinese refiners are now enjoying steep discounts on Russian crude, a scenario that is set to continue after EU sanctions and the G7 price cap were implemented. Therefore, it is likely that refiners will import more oil this year.

By Konica Bhatt

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