Chinese refiners are importing huge amounts of oil ahead of winter, betting that, as the EU phases out Russian fuel, they will be able to take Russia’s place
Europe is preparing to phase out Russian oil and fuel entirely within the next few months.Chinese refiners had just been granted the biggest fuel export quotas since the start of the year.Crude oil imports into Asia jumped in September. Normally such news would spark hope for demand and, consequently, prices, but this time it’s more complicated. And it has less to do with Asian demand than demand in Europe.
The U.S. could maybe increase its fuel shipments to Europe, according to executives from major commodity trading houses quoted in a recentby Energy Intelligence, especially since Russian fuels will be rerouted to other destinations, including Asia and South America, satisfying some of the demand there. And some of these Russian fuels will go to Europe but come from China.
This will likely continue happening because whatever geopolitical games are being played, physical demand for oil products is likely to remain robust until prices become prohibitive. Even then, demand destruction will not happen overnight. A case in point is France, where strikes have paralyzed more than half of the country’s refining capacity, and yet people are queuing to fill up their tanks.It is a double irony that the European Union might need to rely on China for its winter fuel supplies.
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