October marks the sixth consecutive month of lower imports compared to 2023.

China’s crude oil imports continued to decline in October, marking the sixth consecutive month of slower arrivals than in the same period last year. According to data from China’s General Administration of Customs, cited by Reuters, last month saw crude imports drop to 10.53 million barrels per day (bpd) — a 9% decrease from October 2023 and a 2% decline from September’s level of 11.07 million bpd.

This trend signals a significant shift in China’s oil consumption and import behavior, as various factors weigh on the nation’s demand for crude.

Lower Refinery Capacity and Weak Demand from Independent Refineries

One of the key contributors to this slump in crude imports is the reduced capacity at major Chinese refineries. PetroChina, China’s largest oil producer, has been gradually cutting down operations at its Dalian refinery, which has a processing capacity of 210,000 bpd. Reports indicate that approximately half of this capacity was already shut in October, with PetroChina planning to fully shut the refinery in 2025.

Additionally, China’s independent refiners, often referred to as “teapots” and concentrated largely in Shandong province, are facing challenges. These private refiners, which have been a significant driver of China’s oil demand, have been hit by weak refining margins in recent months. Struggling to turn a profit, these teapots have cut processing rates, further contributing to the fall in crude import volumes.

Year-to-Date Imports Down as Chinese Demand Falters

Between January and October, China’s crude imports averaged 10.76 million bpd, representing a 3.4% drop compared to the same period last year. This downward trend comes as a surprise, given that China is the world’s top importer of crude oil and was expected to fuel global demand growth this year. Instead, China’s lower-than-anticipated oil consumption has dampened global oil prices and affected demand projections.

Impact on Global Oil Markets and OPEC’s Revised Forecasts

The weaker-than-expected demand from China has rippled through the global oil market, causing price pressures and leading organizations like OPEC and the International Energy Agency (IEA) to revise down their forecasts for global oil demand in 2024. China’s subdued oil appetite has led to some of the sharpest oil price drops this year, with analysts and traders now tempering their expectations for Chinese demand.

In an interview with Bloomberg, IEA’s Executive Director Fatih Birol remarked, “This year, global oil demand is very weak, much weaker than previous years, and we expect this will continue because of one word — China.” Birol highlighted the country’s evolving energy landscape as a primary factor behind the revised forecasts, with electric vehicle (EV) adoption in China further reducing the need for traditional oil products.

China’s EV Market: Another Factor in Declining Oil Demand

China’s booming EV market has become an additional headwind for oil demand. As the world’s largest EV market, China has seen millions of electric vehicles hit the road in recent years, replacing gasoline-powered cars and reducing the country’s dependence on oil. This trend aligns with China’s broader push for cleaner energy sources and efforts to cut emissions, but it poses a challenge to traditional oil demand growth.

Looking Ahead: Will China’s Oil Demand Recover?

As China’s economy works to regain its momentum, the question remains whether crude oil demand will rebound. Some analysts suggest that the country’s oil imports could stabilize if refining margins improve and refinery operations recover. However, with ongoing investments in renewable energy and the steady rise of EVs, China’s long-term oil demand trajectory may look very different from past growth patterns.

For now, China’s slower-than-expected demand stands as a reminder of the shifting dynamics within global oil markets. As traditional energy demand adjusts to new economic and environmental realities, industry stakeholders will continue watching for signs of recovery or further decline in one of the world’s largest oil-consuming nations.