In recent years, China’s import volume of crude oil by sea has grown rapidly, with a compound growth rate of 10% in 2013-2018. During this period, with the promotion of diversified development of China’s import of crude oil, OPEC countries’ share in China’s import volume of crude oil by sea has declined. In any case, although OPEC’s crude oil exports have been under pressure in recent years, its share of China’s crude oil imports is stabilizing.
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China is an important driving force of global crude oil shipping trade. China’s import volume of crude oil shipping increased from 254 million tons (5.1 million barrels / day) in 2013 to 412 million tons (8.3 million barrels / day) in 2018, accounting for 20% of global crude oil shipping trade. The suppliers of China’s crude oil imports are widely distributed, but 75% of China’s crude oil imports in 2013 came from OPEC countries, which is higher than the proportion of OPEC in the global crude oil marine exports in the same year (64%).
Since 2013, China’s crude oil imports from OPEC and non OPEC countries have increased year by year (see chart this month). During 2013-2018, China’s total import of OPEC crude oil increased by 33%, while the export volume of OPEC countries increased by only 3% over the same period. Although the implementation of production reduction agreements since 2017 has limited the growth of OPEC crude oil exports, and supply of some countries has been interrupted due to the impact of sanctions, China’s crude oil imports from OPEC have continued to increase in recent years. This is mainly supported by the “oil for loan” agreement between China and Angola and the further cooperation between China and Iraq and the United Arab Emirates. In addition, more OPEC crude oil is shipped to China due to the decline of US crude oil imports.
Non OPEC: a rising star
However, since the annual compound growth rate of China’s crude oil imports from non OPEC countries reached 20% in 2013-2018 (compared with 6% in OPEC countries), the share of China’s crude oil imports from OPEC fell sharply in 2013-2017, only 62% in 2018, close to the global share of OPEC crude oil exports. Among the major non OPEC suppliers, Russia’s crude oil exports to China have increased significantly in recent years. Due to the growing demand for local refineries in China and the growing preference for Russian crude oil, Russia’s share of China’s crude oil import by sea increased from 2% in 2013 to 8% in 2018. Meanwhile, China imported 12% of its crude oil from Brazil and the UK in 2018 (only 2% in 2013). In 2017 and the first half of 2018, China’s imports of crude oil from the United States also increased (a total of 12 million tons of US crude oil were imported in 2018).
However, the contraction of OPEC’s share of China’s crude oil imports seems to have slowed down in the near future, from 64% in 2017 to 62% in 2018, and relatively stable at 61% in January October 2019. This year, for the first time in the past six years, China’s imports of crude oil from OPEC countries exceeded those from non OPEC countries (despite a decline in imports from Iran and Venezuela). This is mainly due to the fact that after Saudi Aramco signed supply contracts with some private refineries in 2018, the crude oil imported from Saudi Arabia by China this year increased 62% to 64 million tons year on year. At the same time, the “trade war” between China and the United States has also led to the shift of China’s crude oil imports to some OPEC countries.
In short, in recent years, China’s crude oil import shows a diversified development trend, but OPEC’s share in China’s crude oil import is becoming stable. China is an important export destination of OPEC, but the preliminary agreement reached in the “trade war” between China and the United States recently and OPEC may further reduce production next year. The proportion of OPEC in China next year deserves close attention.