LAUNCESTON, Australia, Aug 29 (Reuters) – Asian crude oil imports rose in August from a two-year low in July as major buyers China, India, South Korea and Japan increased imports.
Total imports are expected to rise to 26.74 million barrels per day in August from 24.56 million barrels in July, according to data compiled by LSEG Oil Research.
While the 2.18 million bpd increase seems large, it is worth noting that July imports were the lowest since the same month in 2022, and August's total was only the fifth-highest in the eight months so far in 2024.
The recovery in crude oil arrivals in August was mainly driven by a 1.05 million barrel increase in China, the world's largest crude importer.
LSEG estimates China's imports for August at 11.02 million bpd, up from July's official reading of 9.97 million bpd, the lowest on a daily basis since September 2022.
Chinese refineries tend to increase crude purchases in the third quarter as they build up stockpiles of refined products to meet peak winter demand.
However, global oil prices were low at the time the cargo was arranged, so imports in August were likely to have also increased.
Benchmark Brent crude futures have been trending down from an all-time high of $92.18 a barrel on April 12 to a low of $76.76 on June 4, coinciding with the buying period for August cargoes bound for Asia.
After hitting lows in June, crude oil prices rose to a high of $87.95 a barrel by July 5, but then weakened again, closing at $78.46 on Wednesday.
It remains to be seen whether higher prices in July will translate into lower imports in September from traditionally price-sensitive importing countries such as India and China.
India's imports in August were up only slightly from July. LSEG estimates that the country, Asia's second-largest crude buyer, saw imports rise to 4.83 million bpd from 4.58 million bpd in July.
The monsoon season likely dampened demand slightly for Indian oil refineries, while export-focused plants may have been concerned about weak regional demand for products such as gasoline and diesel.
South Korea, Asia's third-largest oil importer, is expected to see its imports rise to 2.84 million barrels in August, from 2.65 million in July and 2.49 million in June.
Japan, the world's fourth-largest oil importer, is expected to import 2.39 million barrels per day in August, up 26% from 1.9 million barrels per day in July, its best month since April.
All of these developed North Asian countries tend to increase imports in the third quarter as they build up finished goods inventories ahead of the winter.
Saudi Arabia's supply increases
On the supply side, Saudi Arabia saw a slight recovery in August, with LSEG estimating Asia's imports from the world's top exporter at 4.89 million bpd, down from 4.6 million bpd in July and 4.63 million bpd in June.
Demand for Saudi crude may have been boosted by Saudi Aramco's decision to lower its official selling price (OSP) for August-loading cargoes, lowering the premium of its benchmark Arab Light crude by 60 cents from July to $1.80 a barrel above Oman/Dubai crude.
Asia's imports from Russia fell to 3.6 million bpd in August from 3.71 million bpd in July and 4.19 million bpd in June, mainly due to lower imports from India.
India's imports of Russian crude oil in August are estimated at 1.73 million barrels, down from 1.94 million barrels in July, while US imports rose to 360,000 barrels from 190,000 barrels in July.
This likely reflects the underpricing of U.S. crudes such as West Texas Intermediate relative to Brent and Middle Eastern benchmark crudes such as those from Oman and Dubai.
Asia's total imports from the United States are expected to rise to 1.86 million bpd in August from 1.65 million bpd in July, making it the fifth-largest crude supplier to the region after Saudi Arabia, Russia, the United Arab Emirates and Iraq.
The opinions expressed here are those of the author, a Reuters columnist.
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Edited by Lincoln Feast.
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