LAUNCESTON: Asia’s imports of crude oil rose to the highest in 12 months in May, with the strength being driven by India as the region’s second-biggest buyer is on track to see record arrivals.
The world’s top crude importing region is expected to have arrivals of 27.81 million barrels per day (bpd), up from 26.89 million bpd in April, according to data compiled by LSEG Oil Research.
That’s an increase of 920,000 bpd month-on-month, with the bulk of the gain being accounted for by India, where imports are expected to rise to an all-time high of 5.26 million bpd, up 710,000 bpd from April’s 4.55 million bpd.
In contrast to the strength in India, imports by China, the world’s biggest crude importer, continued to trend weaker, with May arrivals slated at 10.72 million bpd, down from 10.93 million bpd in April, and the lowest on a per day basis since January.
Asia’s number three and four oil importers, South Korea and Japan, saw May imports at roughly the same levels as April, with South Korea’s 2.87 million bpd down slightly from April’s 2.91 million bpd, while Japan’s May arrivals of 2.38 million bpd were slightly up from the previous month’s 2.31 million bpd.
Asia’s imports for May were also softer than the 28.47 million bpd recorded by LSEG in the same month last year.
In the first five months of the year, Asia’s crude arrivals averaged 27.19 million bpd, according to LSEG data, which is only marginally higher than the 27.09 million bpd from the same period in 2023.
Oil holds steady around three-month lows
Within the steady picture that is emerging for Asia’s crude imports so far this year, it’s worth noting the contrasting fortunes of India and China.
Part of India’s robust performance can be attributed to a strong economy, with gross domestic product expanding by 8.4% in the three months to December.
While the pace of growth may have eased in the quarter to end-March, it’s still likely to be around 7%, which is high enough to drive increased demand for transport fuels through increased manufacturing and rising vehicle sales.
India’s election process, which is taking place over several weeks up to June 1 and sees almost 1 billion eligible voters, is also likely to have provided a one-off boost to fuel demand.
A further factor supporting India’s crude oil imports is the ongoing availability of discounted Russian crude, with arrivals from the Western-sanctioned country being pegged by LSEG at 1.96 million bpd in May, up from 1.60 million bpd in April.
This gives Russia a 38% share of India’s imports, almost double the next biggest supplier Iraq, which provided 1.09 million bpd in May.
China imports
Russia was also the largest supplier to China in May, with imports of 2.02 million bpd for a share of 18.1%, although this was down slightly from April’s 2.10 million bpd.
China’s second-biggest supplier in May was Saudi Arabia, with imports from the leading OPEC+ member estimated at 1.81 million bpd, up from 1.58 million bpd.
However, China may trim imports from the kingdom in June after state-controlled oil company Saudi Aramco increased its official selling prices for a fifth straight month.
Higher oil prices may also become more of a factor in coming months, given that May’s imports were likely secured before crude’s rally from mid-March to mid-April.
Global benchmark Brent crude futures rose from $81.08 a barrel on March 11 to a six-month high of $92.18 on April 12.
It’s during this period that the bulk of cargoes arriving in June would have been arranged, while May arrivals would have been purchased when Brent was lower during February and early March.
However, signs of stronger economic growth in Asia may act as a spur to rising oil demand and outweigh the impact of rising crude prices.
The opinions expressed here are those of the author, a columnist for Reuters.
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