China's June oil imports touch decade low: What's the reason?
What's the story
China's crude oil imports have plummeted by a staggering 41.3% in June, hitting their lowest level in nearly a decade. The decline comes as refinery run rates hit a 10-year low, amid weak domestic demand and export restrictions on refined oil products. The measures are part of China's efforts to ensure energy security amid the ongoing Iran war.
Import statistics
A continued decline from May's 8-year low
According to the customs data, China imported 29.27 million tons of crude oil in June, or 7.12 million barrels per day. This is the lowest since October 2016.
The decline had continued from May when the imports had already hit an eight-year low after a 12% drop from May's levels.
Iranian oil
Iranian oil imports fell by 40% month-on-month
China's seaborne crude imports were around six million bpd in June.
Imports from the Middle East hit a decade low, while Iranian oil imports also fell by 40% month-on-month to below 800,000 bpd.
The utilization rate of China's crude distillation units was at 57.72% in June, down by 3.28% month-on-month and a massive decline of over 13% year-on-year.
Expert opinion
Potential for recovery in China's refining sector
Emma Li, an analyst at Vortexa, said that "refinery run rates were likely near a 10-year low," owing to weak domestic demand and refined oil product export restrictions.
However, she added that if these export restrictions are eased, run rates could see a partial rebound.
This suggests potential for recovery in China's refining sector in the future.