China’s oil refinery throughput reached its highest level in nearly two years during June 2023, driven by improved fuel margins and the conclusion of seasonal maintenance. The country’s refiners processed an impressive total of 15.2 million barrels per day (bpd) of crude oil, marking an increase of 8.5% compared to the same month last year, according to official data released on Tuesday.
This surge follows a significant decline in May, when refinery output fell to approximately 13.92 million bpd. This figure represented the lowest processing rate since August 2022, primarily due to extensive maintenance activities among both state-owned and private refiners. The May output was 1.8% lower than the same month in 2022, as refiners prepared for the anticipated peak driving season.
Despite an uptick in crude oil imports in March and April, these increases were not necessarily indicative of a rebound in fuel demand. Analysts suggest that refiners capitalized on lower crude prices amid ongoing uncertainties surrounding sanctioned barrels in the global market. As maintenance concluded, refiners ramped up their processing rates in June, coinciding with a substantial rise in crude oil imports, which averaged 12.14 million bpd. This increase was largely fueled by heightened deliveries from Saudi Arabia and Iran.
Anticipating Peak Demand
As refiners returned to full capacity, they began to adjust their operations in anticipation of peak demand expected in the third quarter. Despite an overall slowdown in gasoline and diesel consumption, refiners aimed to capitalize on favorable margins, particularly for diesel products. Analysts predict that robust Chinese imports and refining output will persist into July, coinciding with the summer travel season and activities of state-held refiners.
This sustained demand from China is poised to exert upward pressure on global oil prices in the coming weeks. The summer market is expected to be tighter than previously forecasted, and strong Chinese consumption could be a bullish factor as international markets respond to these dynamics.
According to Tsvetana Paraskova for Oilprice.com, the combination of increased refining activity and higher imports underscores China’s strategic positioning in the global oil landscape, particularly as it navigates ongoing geopolitical uncertainties.
