Beijing, the world’s top crude importer, saw its oil imports decline to 11.1 million barrels per day in 2024, down from 11.3 million in 2023.
China’s appetite for oil remains substantial, but signs of a slowdown are emerging. The numbers speak for themselves: Beijing, the world’s largest crude importer, brought in 11.1 million barrels per day in 2024, down from 11.3 million in 2023. This decline in demand has reduced refinery activity and forced many independent facilities to shut down.
What’s driving the slowdown? China’s fuel demand appears to have peaked earlier than expected. Meanwhile, the government’s push to eliminate inefficient companies, coupled with reduced tax rebates on raw material imports, has further squeezed small independent refiners—often called "teapots"—which typically process around 320,000 barrels per day.
In Shandong province, several refineries operated by Shandong Shangneng Group, Kelida Petrochemical, Wonfull Petrochemical, and China Overseas Energy Technology have reportedly halted operations. Under the revised tax framework, refiners receive refunds covering just 50% to 80% of the 1,218 yuan ($167.18) per ton consumption tax on imported crude, effectively increasing raw material costs by $33 to $83 per ton, or $12.80 per barrel—leading to losses of 300 to 600 yuan per ton.
Less Oil for China
In 2024, China’s crude imports fell by 1.9%, marking the first annual decline in two decades (excluding Covid-related slowdowns). “China’s 2024 performance was disappointing, with markets expecting stable or stronger growth from 2023. Deflationary pressures and transportation electrification have curbed demand,” said Emril Jamil, senior analyst at LSEG, in an interview with Reuters.
China’s demand for transportation fuels barely grew in 2024. Rapid vehicle electrification reduced gasoline consumption, while the ongoing real estate crisis and weak export demand dragged down diesel use. Analysts now believe China’s fuel consumption—excluding petrochemical feedstocks—likely peaked in 2023.
According to Chinese consultancy Oilchem, independent refineries in the Shandong hub operated at just 53.66% of their processing capacity in 2024—an 8.3 percentage point decline from 2023. Additionally, the closure of PetroChina’s Dalian refinery, as part of a relocation plan, and indefinite shutdowns at Sinochem Group facilities further contributed to the drop in crude imports.
Even state-owned oil giant Sinopec is feeling the squeeze. Its refining margins for the first three quarters of 2024 averaged just $5.65 per barrel—the second lowest since 2019. Sinopec, China’s largest refiner, has revised its forecast for peak crude consumption to 2027, moving up from the previous 2026–2030 estimate.
What’s Happening to the Dragon?
Foreign oil has fueled China’s economic rise over the past two decades, enabling it to build the world’s largest auto industry, expand its rail and air transport networks, and construct thousands of skyscrapers. In 2022, 72% of China’s crude supply came from imports. Today, the picture is changing.
The culprit? The Chinese economy itself. The deepening housing crisis has slowed construction, curbing demand for diesel-powered heavy machinery and petrochemical-derived materials like paint, pipes, and insulation. At the same time, structural shifts are reshaping energy consumption. More trucks are switching from diesel to liquefied natural gas, while surging adoption of electric vehicles is depressing gasoline and diesel sales.
Global Impact: The $500 Billion Question
What does this mean for the global economy? Over the past 30 years, China has accounted for half of all global oil demand growth. If that trend stalls, the $500 billion that oil companies spend annually on new oil and gas exploration may prove excessive, the Financial Times warns.
OPEC, the world’s most powerful oil cartel, remains optimistic. Despite last year’s decline in imports, it projects that China’s oil consumption will continue to rise by 2.5 million barrels per day from 2023 to 2050. But as we’ve seen, some analysts argue that the peak is already near.
In the meantime, China’s imports of natural gas—both liquefied and pipeline-supplied—jumped 10% in 2024, reaching 131.69 million tons, a new record. The energy landscape is shifting, and the world is watching closely.
Original article published on Money.it Italy 2025-03-28 08:21:00. Original title: La Cina non ha più sete di petrolio: cosa succede adesso?
