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  • Will China's Crude Demand Continue to Rise?

Will China's Crude Demand Continue to Rise?

Jan 18 2017 Read 2855 Times

With a population of more than 1 billion, it’s no surprise that China is an expert when it comes to guzzling crude. And in 2017, economic analysts are predicting that a combination of factors could mean that the Republic is thirstier than ever.

So what factors will contribute to China increasing its demand for crude in 2017? The Republic’s glut of teapot refineries will play a major role, with privately owned refiners importing a huge 1.2 million barrels of oil a day in April last year. The figure represents around 15% of China's total crude imports, with some specialists predicting an increase over the next 12 months.

Small but mighty – the sway of China’s ‘Teapot Refineries’

Of course, not all market analysts agree. While the recent OPEC output cut deal may have revived oil prices for the time being, some experts are predicting that lower Chinese demand could come back to haunt recovering oil markets in 2017. In the past, China’s intense demand for crude has prevented oil prices from bottoming out. Though in 2017, the outlook might not be quite as sweet. There have been reports that China’s new ‘Teapot Refinery Tax’ could pose as a major threat to global oil demand, with the current state of the country’s Strategic Petroleum Reserve (SPR) thrown into the spotlight.

China’s SPR in the spotlight

While China hasn’t released any official figures revealing how full its SPR tanks are, independent research consultancy Energy Aspects estimates that the reserve could be approaching capacity. This is largely due to teapot refiners being allowed to import foreign crude, which could see China add an additional 150-million-barrel commercial capacity to its SPR. If shipments for the reserve stop, Chinese demand for imported oil could drop by up to 15%. This trend could explain why over the past few months, China’s seemingly insatiable thirst for oil has undergone a modest slump.

As a result, 2017 will see both producers and investors keep a careful watch on China’s position on smaller independent refiners, as they could have the power to make or break global oil demand.

While global crude demand is a hot topic going into 2017, it may not be front of mind for long. ‘Using Manifold Feedstocks for Ultrasonic Transesterification of Biodiesel’ explores the rise of green energy, and the latest techniques being used to create efficient, eco-friendly fuel.

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