MNI INTERVIEW: China 2024 Crude Oil Imports To Grow Marginally

China’s demand for crude oil imports will increase marginally in 2024 from this year’s 11 million bpd as economic growth firms and the government adds infrastructure stimulus, but this poses little significant upside risk to world oil prices, a leading China energy expert has told MNI.

“October’s year-to-date 14.4% growth y/y in crude oil imports is driven by base effects which will slow down next year, but 2024 import demand will increase marginally over this year off the back of domestic economic growth if world oil prices remain stable,” Lin Boqiang, president of the China Energy Policy Research Institute at Xiamen University, told MNI.

The World Bank recently warned 2024 oil prices could reach USD157 a barrel should conflicts in Ukraine and the Middle-East escalate, with some analysts further concerned that improved Chinese growth prospects, buoyed by an additional CNY1 trillion in infrastructure spending, will further add to demand.

But Lin noted that while the additional infrastructure spending would make some difference, the demand would be spread over the next few years.

“Next year we expect world prices to fluctuate within 10% of USD80 per barrel if there is no further escalation in the two conflicts,” Lin added.

Gita Gopinath, first deputy director of the IMF, told MNI in Beijing earlier this week that she did not expect an increase in global inflationary pressure in 2024 following the IMF’s upgrade of China growth estimates by 0.4pp both this year and next. (See: MNI BRIEF: No Inflation Impact From China Growth Revision- IMF - Bonds & Currency News | Market News)

Chinese imports of crude oil reached 473.22 million tonnes year to date in October, up 14.4% y/y, according to customs data.

PROPERTY IMPACT

Although the World Bank’s recent Commodity Outlook October report cited weakness in China’s property sector as weighing on commodities this year, Lin cautioned that energy markets are yet to see the full impact from China’s real estate slowdown.

He noted that the government's insistence on developers completing unfinished homes this year had offset the negative impact on energy demand, but that once the backlog of must-finish projects dries up, the sector’s downward pressure will increase significantly in coming years.

Meanwhile, China is on track to achieve the National Development and Reform Commission’s recently-announced domestic crude oil processing capacity cap of 1 billion tonnes per year by 2025 as part of the country's efforts to decarbonise, Lin said.

He did not expect China to extend its Q4 crude oil import quota this year given the current policy stance, he said.