Japanese Media: China and the U.S. Contribute to Stabilizing Global Oil Prices
A research fellow at Japan's Nomura Research Institute, Toshihide Kimoto, wrote that as the world’s largest oil producer and largest importer respectively, the United States and China have alleviated global crude oil supply-demand tensions and stabilized oil prices amid the de facto closure of the Strait of Hormuz through their respective efforts.
In April and May, the U.S. increased its crude oil exports to over 5 million barrels per day—up by more than 1 million barrels from the previous average of about 4 million barrels per day. Notably, Japan significantly ramped up its crude oil imports from the United States.
Meanwhile, according to Chinese customs data, China’s daily crude oil imports in May (including oil delivered via pipelines from Russia) reached 7.8 million barrels per day, down from the earlier average of around 11 million barrels per day. The reduction of 3 million barrels roughly equals the combined daily consumption of Italy and France.
Together, China and the U.S. have contributed 4 million barrels per day to the global oil market, easing global crude oil supply-demand tightness.
Since the Strait of Hormuz supplies approximately 20 million barrels of crude oil and other goods to the world daily, China and the U.S. have mitigated about 20% of the supply shortfall caused by the blockade, helping stabilize crude oil prices.
Structurally, China’s demand for crude oil as fuel is declining. Short- and medium-distance travel and gasoline-powered vehicles are increasingly being replaced by high-speed rail and electric vehicles. Moreover, China’s electricity generation is primarily powered by renewable energy and coal.
This trend has intensified since the escalation of the Middle East situation. According to data from China’s Ministry of Transport, air passenger numbers during the May Day holiday declined by about 5.7%, while railway passengers rose by 4.6%. Electric vehicle charging volumes on highways surged by 53% during the holiday. The ministry estimates that an average of 15.4 million electric vehicles were on the road each day during the May Day holiday—a 33% increase compared to last year.
China’s demand for crude oil is shifting from fuel toward the production of basic chemicals such as plastics.
Since the escalation of the Middle East crisis, refineries—both state-owned and private—have significantly reduced operating rates to prepare for potential future crude oil shortages. In May, China’s refinery operating rates dropped by 10 percentage points, while the operating rates for facilities converting hydrocarbon feedstocks into chemicals like naphtha fell by 7 percentage points.
China has reduced crude oil imports by about 3 million barrels per day, yet so far this has had almost no noticeable negative impact on economic activity. Once normal crude oil imports resume, it will likely lead to increased naphtha production.
It can be said that China and the U.S., as major powers, have somewhat alleviated global crude oil supply-demand imbalances and suppressed the upward trend in oil prices—but how long this situation can persist remains uncertain.
The most critical factor remains the restoration of normal operations at the Strait of Hormuz.
A Japanese internet user commented: “The data indeed shows this. Although I don’t want to see a ‘G2’ become a reality, I must accept it.”
Original article: toutiao.com/article/1868498985428169/
Disclaimer: This article represents the personal views of the author.