Asia’s crude oil imports in the first half of 2024 have shown a modest decline compared to the same period last year. These figures contradict expectations that the region, which has the highest oil consumption globally, would fuel an increase in global demand. Statistics published by LSEG Oil Research reveal that Asia imported 27.16 million barrels per day (bpd) of oil from January to June, reflecting a slight decrease of 130,000 bpd compared to the 27.29 million bpd during the same period in 2023.
China’s Weak Imports Hamper Overall Asian Demand: The reduced inflow of oil in China, the world’s largest oil importer, has played a significant role in the decline of Asia’s crude oil imports. Although India, Asia’s second-largest oil consumer, showed some advances in import numbers, they were not enough to compensate for China’s weakened position.
Undermining 2024 Demand Projections: The weakened growth in Asia’s crude oil imports during the first half casts doubt on demand projections made by key industry groups like the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC). While imports play a crucial role in driving oil demand in the region, other factors such as domestic oil production and changes in inventory levels also contribute to the overall demand landscape.
Reliance on Imports for Asian Oil Demand: Since Asia depends heavily on oil imports, particularly from Russia and Central Asia in the case of China, robust imports are essential to meet the demand projections put forth by the IEA and OPEC in the second half of the year.
China’s Challenging Import Figures: Contrary to the IEA’s projection of a 500,000 bpd expansion, OPEC’s June monthly oil market report predicts a 720,000 bpd increase in China’s oil demand for 2024. However, in the first half of the year, China’s imports were estimated to be around 11.08 million bpd, indicating a decrease of 300,000 bpd from the same period in 2023. To understand the impact of weak imports, it is vital to explore if the shortfall is being offset by local oil production.
China’s Domestic Oil Output Compensates Partially: During the first five months of 2024, China’s domestic oil output reached 4.28 million bpd, showing a 1.8% increase of over 140,000 bpd compared to the same period in 2023. While the rise in local oil production manages to offset a portion of the decline in imports, it falls short of compensating for the entire decline.
India’s Imports Provide Bright Spot: Looking at the brighter side, India’s oil imports during the first half of 2024 reached approximately 4.94 million bpd, reflecting a 90,000 bpd (1.9%) increase from the official recorded figure of 4.85 million bpd during the first half of 2023. Despite this growth, India’s import surge is lagging behind OPEC’s projection that its oil demand will rise by 230,000 bpd in 2024. Stronger growth and imports will be necessary for India to meet the exporting group’s predictions.
Demand Projections by IEA and OPEC: OPEC projects that Asia’s total petroleum demand in 2024 will increase by 1.3 million barrels, with 720,000 barrels contributed by China, 230,000 barrels by India, and 350,000 barrels by the rest of the continent. Meanwhile, the IEA predicts an increase of 900,000 bpd in Asia’s consumption for 2024, with 500,000 bpd coming from China and the remaining 400,000 bpd from the rest of the continent.
The Uphill Climb for the Second Half: Despite optimistic demand projections, the decline of 130,000 bpd in imports during the first half of the year presents challenges for the oil market in the second half. Market participants’ attention now turns to China’s economy, and whether it will rebound strongly in the second half, accompanied by stronger economic growth across the region. Should OPEC and its allies in the broader OPEC+ group manage to maintain oil prices above $80 a barrel consistently, robust economic growth becomes vital to drive higher demand for crude across Asia.
