Oil Daily | US Sanctions on Chinese Refiners Threaten Oil Flow Amid Rising China Crude Imports

【Global Oil Supply and Demand】

Chinese coal imports surged to 46 million tons in September, driven by declining domestic production and increased demand for power amid heatwaves. The price gap between domestic and imported coal widened, making imports more competitive. This rebound follows earlier reductions in coal imports and highlights potential sustained recovery amid government actions against oversupply.

China's crude oil imports increased by 3.9% year-on-year for September 2024, with a daily average of 11.5 million barrels. Refinery processing rates also rose, although import rates fell by 4.5% month-on-month, due to quota exhaustion. New US sanctions on Chinese independent refiners and terminals may impact future flows from Iran. China continues stockpiling discounted Russian and Iranian crude, expanding storage capacity amid forecasts of peak demand growth.

【Latest Oil Policies】

Greenpeace accused the British Crown Estate of inflating offshore wind costs due to its monopoly over the UK seabed. The group suggests lease condition changes or legal action. This affects consumer electricity costs and offshore wind developer profits, hindering the UK's net-zero goals. The government extended guaranteed-price contracts and raised the minimum price for offshore wind to encourage developer participation.

The U.S. imposed sanctions on the Rizhao oil terminal, affecting Sinopec, which receives 20% of its crude imports there. This move follows China's tightened export controls on rare earths, reversing a recent slide in oil prices. U.S.-China tensions escalated with new tariffs and export controls, but China argues these measures are regulatory rather than punitive.

【Industry News】

OPEC maintains a cautious production strategy, gradually unwinding voluntary cuts to prevent oversupply. Despite uncertain global demand growth, OPEC's restraint has helped stabilize the market recently. The oil markets remain balanced between hopes for diplomatic resolutions and risks of economic fragmentation. Stability may depend on eased trade tensions and steady demand indicators.

【Company News】

The U.S. sanctions targeting the Rizhao terminal may affect Sinopec, which owns 50% of the facility. Sinopec handles most crude flows there, and the sanctions impact its operations due to its involvement in trading Iranian crude. These sanctions reflect broader geopolitical tensions and regulatory measures affecting China's energy sector.

【Others】

Monday saw a rebound in oil prices as investors hoped for eased tensions between the U.S. and China, with potential talks at the APEC summit. Geopolitical uncertainties and oversold crude prices prompted bargain-hunting, but volatility remains with mixed demand and supply signals. Investors are positioning for short-term stability amidst ongoing trade tensions.