Asian refiners are increasingly looking to purchase additional WTI Midland crude as China’s demand for this grade declines amid ongoing trade tensions and tariffs. With state-run Chinese refiners scaling back their interest in U.S. crude, traders in North Asia foresee potential discounts on several VLCCs (very large crude carriers) that may be seeking new buyers in the Asian market. Recent data from China’s General Administration of Customs highlights a significant drop in U.S. crude imports, with projections showing that by 2024, the country will import around 190,000 barrels per day, amounting to about 5.8 million barrels per trading cycle.
This downturn means that roughly three additional VLCCs of U.S. crude per month may need alternative markets, providing attractive opportunities for refiners in Northeast, Southeast, and South Asia to acquire these barrels at lower prices. Industry sources indicated that China’s crude imports from the U.S. could become negligible soon after the implementation of massive tariffs. The forecast predicts that the U.S. crude trade with China could soon be eliminated entirely, prompting other regions to capitalize on the available supply.
Notably, refiners in South Korea and Japan report being offered options for additional cargoes for the upcoming months, positioning them to benefit from this shift. Despite these opportunities, decisions on purchasing more U.S. crude largely depend on the interplay between U.S. and Persian Gulf crude prices and the refining economics. Japanese refiners, in particular, face pressure due to fluctuating global demand and economic uncertainties.
As a result, even with attractive pricing, many refiners in Northeast and Southeast Asia will exercise caution in expanding their crude purchase volumes, mindful of broader economic conditions that could affect oil demand.