Asia’s crude oil imports have started the year on a strong note, with India leading the way, according to data compiled by LSEG Oil Research. In January, Asia’s imports increased to an eight-month high of 28.57 million barrels per day (bpd), up from 27.03 million bpd in December. China, the top crude buyer globally, imported 11.31 million bpd in January, slightly lower than December’s 11.48 million bpd but higher than January 2023’s 10.24 million bpd. It is likely that China’s refiners were prompted to maintain robust import levels due to lower oil prices during the arrangement of cargoes and the release of most of their annual import quotas in a single tranche at the beginning of the year.
China’s imports from Russia, both via pipeline and tankers, reached 1.94 million bpd in January, making it the biggest supplier of crude to China, surpassing Saudi Arabia’s 1.68 million bpd. However, Saudi Arabia’s crude oil arrivals in China increased from December’s 1.38 million bpd, indicating the world’s top exporter’s efforts to regain market share in China. Moreover, Saudi Arabia’s decision to cut its official selling prices (OSP) for its flagship Arab Light crude for February-loading cargoes to the lowest in 27 months is expected to further boost its imports to China. The rest of Asia also witnessed an increase in imports, rising from 5.46 million bpd in December to 5.63 million bpd in January.
India, Asia’s second-largest crude importer, is on track for record imports in January, with LSEG Oil Research recording arrivals of 5.33 million bpd, up from December’s 4.65 million bpd. Russia remains India’s primary supplier, providing 1.43 million bpd in January, while Iraq ranked second with 1.34 million bpd. The country’s robust demand for crude can be attributed to its strong economy and rising profit margins for refined fuels in Asian markets.
The outlook for Asia’s crude imports remains positive, with the factors that contributed to the strong start likely to continue. Cargoes arriving in February were purchased when crude prices were declining, and despite a subsequent rally in prices, demand is expected to remain high. China may turn to its inventories to balance any potential impact of higher prices, while India’s price sensitivity may take several months of sustained higher prices to significantly affect imports. The trajectory of oil prices will play a crucial role in determining the sustainability of Asia’s strong crude imports in 2024.
Overall, Asia’s crude oil imports in January saw significant growth, driven by robust demand from China and India. While China’s imports were slightly lower than December, they exceeded the previous year’s figures. Saudi Arabia is making efforts to regain market share in China, which is likely to increase imports. India, on the other hand, is poised to set a record for crude imports due to its strong economy and favorable profit margins. The year started on a positive note for Asia’s crude imports, and the outlook for the coming months largely depends on the trajectory of oil prices.
