Although China is extracting oil, it is still not enough. The data shows that in the first 11 months of this year, China’s oil extraction volume was 172 million tons, that is an average of 3.7 million barrels per day. The extraction volume ranked sixth in the world, even higher than that of OPEC member Iran. Even so, China’s crude oil imports are still increasing.
According to China Customs data, in November this year, China’s crude oil imports were 42.872 million tons, or 10.43 million barrels per day, breaking through 10 million barrels per day for the first time. In the first eleven months of this year, the import volume was 418 million tons, an increase of 8.4% year-on-year. The daily import of 10 million barrels is equivalent to the fact that the daily output of oil in Iraq and Canada is not enough for Chinese imports. Iraq is the world’s fourth-largest crude oil producer with a daily output of about 4.46 million barrels. Canada is the fifth largest oil producer in the world with a daily output of 4.29 million barrels. Even if these two countries export all of their oil to China, Not enough for China.
According to Platts, China’s crude oil and supply gap is huge, and more than half of its crude oil needs to be imported. China’s crude oil import dependence exceeded 50% for the first time in 2009, and remained at 55% in 2010 and 2011. Last year, China’s dependence on foreign crude oil was 60%, and it has now risen to 72.3%.
Due to China’s huge crude oil market, there are many countries that export oil to China, including The U.S, Russia, Iran, Saudi Arabia, Angola, and Brazil. Among them, Saudi Arabia was China’s largest crude importer, but because Saudi Arabia has raised the price of crude oil for China in order to please the United States, China cut more than $3 billion in oil imports from Saudi Arabia. Since 2017, China has cut Saudi Arabia’s oil imports by 40%, while withdrawing some joint ventures with Saudi Arabia. Although Saudi Arabia has cut its exports to China, it has indicated that it can cut prices on oil for, but China has lost confidence in Saudi Arabia.
With the reduction of Saudi crude oil imports, China began to import larger amounts of Russian crude oil. In 2017, China imported about 59 million tons of Russian oil, while the total imports to OPEC members were about 4.7 million tons, of which Saudi Arabia accounted for 12.43. %.
Crude oil prices could plunge lower
Saudi Arabia has restored half of the crude product that was lost to devastating attacks on its oil industry, and the kingdom said output will be fully restored by the end of this month.
If we don’t see any new drone attackS on Saudi oil infrastructure we could see Crude oil prices going even lower. Before the oil attacks against Saudi oil infrastructure, the Crude oil prices were already heading lower.