Due to China and India continuing to purchase Russian crude oil in large quantities at discounted prices, Asia's crude oil imports in July soared to a record high. Data compiled by Refinitiv Oil Research showed that crude oil imports arriving in Asia in July reached 27.92 million barrels per day, not only surpassing the 27.35 million barrels per day in May but also exceeding the record of 27.53 million barrels per day in June.
The strong performance of Asia's crude oil imports was largely due to China, with Refinitiv estimating China's crude oil imports in July at 12.04 million barrels per day, surpassing the threshold of 12 million barrels per day for the third consecutive month. Besides China, other major Asian buyers also increased their imports in July, with India's crude oil imports expected to reach a five-month high of 4.94 million barrels per day.
Russia remains China's largest crude oil supplier, although in July, the volume of Russian pipeline and sea-borne crude oil was 2.04 million barrels per day, a significant decrease from June's 2.56 million barrels per day. However, this volume still exceeded Saudi Arabia's shipments to China, with Refinitiv estimating Saudi Arabia's shipments to China in July at 1.82 million barrels per day, below June's 1.94 million barrels per day.
The decline in export volumes from Russia and Saudi Arabia to China may reflect the impact of OPEC+'s latest production cut measures on China's demand. Data show that China has increased its imports of crude oil from other producing countries, with imports from Angola and countries in Southern Africa in July reaching 900,000 barrels per day, almost twice the daily import volume in the first half of this year. Additionally, China's imports from Oman in July reached 910,000 barrels per day, higher than June's 760,000 barrels per day, making Oman the fourth-largest crude oil supplier to China in July, only behind Russia, Saudi Arabia, and Iraq.
It is worth noting that, according to official data, China's crude oil inventories in June are expected to have increased by 2.1 million barrels per day, while the increase in crude oil inventories in the first six months of the year may have been only 950,000 barrels per day. This indicates that the large volumes of crude oil imported by China are entering commercial or strategic reserves, rather than being converted into gasoline and diesel for consumption, which is considered by market participants as the key reason for the perceived weakening in China's crude oil demand.
Apart from China, Indian refiners also purchased Russian crude oil in large quantities at discounted prices, with Refinitiv estimating India's import volume in July to reach a five-month high of 4.94 million barrels per day. However, the market is cautious about India's ability to maintain the import levels of July, given India's higher sensitivity to oil prices compared to other Asian countries, and the potential for Russia's crude oil production declines and price increase measures to suppress India's interest in Russian crude oil in the coming months.
