BAKU, Azerbaijan, June 6. The return of China’s appetite for crude oil imports is a modestly bullish development for global oil prices, although there are risks, as the rise in imports has not yet been matched by comparable recovery in underlying domestic demand, Trend reports with reference to Fitch Solutions.
The company’s report reveals that though it must be noted that the global oil market has not been short of bullish triggers in 2022; notably supply shortage risks exacerbated by the Russia-Ukraine conflict, the measured pace of easing of OPEC+ output cuts and a post-pandemic release of pent-up demand across continents.
“A decision by the EU to ban 90 percent of Russian crude imports by the end of 2022 adds further uncertainties heading into the second half of the year. High global prices will continue to pressure consumers at home, and the more conservative outlook for domestic fuel demand is expected to prompt China’s refiners to lean more heavily on exports for profits, in turn, exerting downside pressure on current soaring refining margins,” reads the report.
Experts from Fitch Solutions point out that the largest of China’s top refined fuels export destinations are forging ahead with steps to reopen their economies including the likes of Singapore, the Philippines, Australia and South Korea.
“China’s import mix will continue to favour Middle East crude, due to contracts in place, refinery configuration and supply availability, although the region’s share may come under threat as China seeks to diversify import sources and improve energy supply security. International sanctions are likely to deter significant outright increases in Russian oil imports, although this is an area to monitor, as despite considerable risks, a total stoppage in oil flows from Russia remains highly unlikely.”