Oil Daily | Chinese Naphtha Imports Surge Amid U.S. Supply Disruptions and Rising Petrochemical Demand

【Global Oil Supply and Demand】

Chinese petrochemical producers are expected to increase naphtha imports to a record high due to disrupted U.S. ethane and propane supplies amid trade tensions. With uncertainties continuing, demand for naphtha, a petrochemical feedstock, will rise, driven by expanding petrochemical capacities in China.

China's crude oil demand appears stable despite a weak CPI, with refiners increasing throughput and restocking inventories. Chinese refiners are operating at high capacity to rebuild inventories, with the potential for increased crude imports. The low CPI allows monetary flexibility, supporting oil demand.

Morgan Stanley anticipates a moderate rise in OECD oil inventories over the next year, while global supply remains balanced. Despite OPEC production increases, much of the inventory build-up has occurred outside OECD countries, with markets absorbing the supply. Analysts maintain a stable short-term outlook for oil markets.

【Oil-Producing Countries Dynamics】

Kazakhstan, despite boosting oil production beyond its OPEC quota, plans to stay in the alliance, citing market stability benefits. The country's increased production, driven by international majors, poses challenges for OPEC as Kazakhstan prioritizes national interests over quota adherence.

Nigeria aims to increase its OPEC production target to 2 million bpd by 2027, currently below its quota. The country is addressing oil theft and vandalism while major companies plan investments to boost output. Nigeria's strategy involves raising production capacity and combating theft to meet targets.

【Latest Oil Policies】

The UK government extends renewable energy contract lengths to 20 years under the CfD scheme, aiming to lower costs and support clean power goals. The change aims to provide predictable returns for developers, though critics fear it may lead to overpayment if wholesale prices fall.

【Industry News】

MidOcean Energy, supported by Saudi Aramco, is leading talks to acquire a minority stake in Petronas's Canadian LNG business. This move is part of Aramco's LNG expansion strategy, offering exposure to North America's growing LNG export market while aligning with Petronas’s capital reallocation goals.

Germany commissioned a significant number of onshore wind turbines in early 2025, yet remains behind renewable goals. Reforms have accelerated approval times, helping to boost wind capacity. However, further simplification and grid modernization are needed to meet ambitious targets by 2030.

【Company News】

General Motors invests $4 billion in traditional gas-powered vehicles, reflecting current market demand despite its commitment to an all-electric future by 2035. The investment adjusts production capacity to meet consumer preferences as the company navigates financial challenges in its EV segment.

Google commits to sourcing electricity from hydropower facilities under a $3-billion agreement with Brookfield Asset Management, marking the largest corporate clean power deal for hydroelectricity. The deal supports Google's operations across the PJM region with carbon-free energy.

【Others】

U.S. gasoline and diesel prices rise amid tight inventories and strong demand, despite falling crude oil benchmarks. The increases are attributed to export strength and regional constraints, with economists expecting energy costs to impact consumer price indices.