China overtook the US as the world’s biggest importer of crude oil in April, the culmination of a seismic shift in global energy flows over the past decade. Chinese customs data showed crude oil purchases from overseas hit a new high of 7.4 million barrels a day in April, equivalent to roughly one in every 13 barrels consumed globally and topping US imports of 7.2 million bpd. The US routinely exports about 500,000, Financial Times said in a report.
While China’s imports are not expected to consistently surpass those of the US until the second half of this year, the move illustrates how the US shale revolution has cut the country’s reliance on oil from overseas — and how China’s demand has grown even as its economy slows. Colin Fenton, managing partner at Blacklight Research, said China’s imports increased as it stockpiled oil. “It’s begun,” Fenton said. “China’s crude imports have been above trend in four of the past five months.”
The jump in imports last month was partly down to higher shipments from Iran, according to consultancy Energy Aspects. China Oil also bought a record number of Oman and Abu Dhabi crude cargoes last month, in a public trading window that helps determine the region’s benchmark prices.
China’s state-backed traders are taking a much more visible role in the global crude market. They have steadily built up more sophisticated operations to compete directly with established trading desks at western oil companies like BP and Royal Dutch Shell.
In the US, higher prices and more efficient motor vehicles curbed consumption in the aftermath of the financial crisis, while the surge in shale oil output over the past three years has reduced imports. US imports could rebound in the short term, traders say, with fuel demand boosted by the collapse of oil prices to $65 a barrel. The price fall has also sharply reduced drilling activity in US shale regions such as North Dakota. But the long-term trend is in China’s favor. The country is adding more refining capacity with its economy still growing at more than 7 per cent a year.
“The world has a lot of oil,” one senior trader at a Chinese firm said. “And we need a lot of oil.”
