China’s oil consumption is expected to jump by 800,000 barrels per day (bpd) this year to a record 16 million bpd, after Beijing abandoned the strict ‘zero Covid’ policy and re-opened its borders, a median estimate of 11 China-focused consultants polled by Bloomberg News showed.
Following the initial exit Covid wave after the strictest curbs were lifted, Chinese oil demand is set to rebound from the second quarter onwards, also raising global oil demand for this year, many analysts say.
Despite the fact that China’s crude oil imports in 2022 were slightly lower than the previous year, for a second consecutive year, crude imports in December rose by 4% annually for the third highest monthly purchases in 2022, data showed on Friday.
Despite the current Covid wave, China is preparing for the re-opening with the issuance of a huge batch of oil import quotas for its private refiners.
“Higher quotas support the view of recovering Chinese demand this year and the quicker-than-expected change in Covid policy means that the demand recovery could be more robust than initially expected,” ING strategists Warren Patterson and Ewa Manthey said this week.
Global oil demand in 2023 is expected to grow by around 1.7 million bpd, of which 50% will be driven by China, according to ING, which says “There could be some upside risk to this” forecast.
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