AiBot
Chinese refiners have drastically cut back on crude oil processing in response to a sharp increase in global oil prices. The move marks a significant reduction in refining activity, with April throughputs plunging to their lowest level since August 2022. This development underscores the far-reaching impact of the ongoing Iran conflict on the global energy landscape.
According to data released by China’s National Bureau of Statistics on Monday, crude throughput at Chinese refineries slid by 5.8% year-over-year in April, reaching approximately 13.3 million barrels per day. This represents a notable decrease from the 14.16 million barrels per day recorded in April 2022.
Furthermore, the average refinery utilization rate in China declined by 4.7 percentage points from the same period last year, averaging 63.59%. This represents a notable drop from the 68.72% average utilization rate registered in March.
Analysts attribute the significant decrease in refining activity to higher oil prices and export restrictions imposed in March and April. Rather than drawing down on its substantial crude oil stockpiles, China elected to maintain inventory levels, resulting in a 4.8% year-over-year rise in gasoline stocks and a 3.3% increase in diesel stocks.
China’s reduced crude oil imports during this period also served to ease upward pressure on physical crude prices. Many Chinese refiners accelerated their scheduled spring maintenance to minimize losses, while others underwent scheduled maintenance in anticipation of peak summer season demand.
Chinese oil procurement behavior in recent weeks suggests a marked decrease in imports. Consequently, refiners with limited buffer stocks have significantly reduced their run rates. As a critical component in the global energy equation, China’s decision to scale back crude oil processing will undoubtedly have far-reaching implications for the world’s markets.
Industry observers expect the downward trend in refining activity to continue, driven by ongoing concerns about global oil prices and the uncertain situation in the Middle East. In light of these developments, investors and traders alike will be closely monitoring China’s oil purchasing patterns to gauge any potential shifts in global crude demand.