Why China has every chance to take the lead in the oil refining market
For a long time, the U.S. held the lead in the oil market, but the pandemic and its aftermath changed the balance of power. Now experts predict that the country will concede its position in the oil refining segment and China will take the first place.
The decline in demand for energy introduced the American industry into the crisis, as a result of which many producers had to reduce production. However, in China the opposite situation was observed, having recovered from the pandemic, they began to actively build up their capacities. Therefore, experts do not rule out the fact that this year the U.S. will cease to be the leader in oil refining, which it has been since the beginning of raw material production, since the 19th century. China will take their place, which increases the production facilities. At present, there are four projects of oil refineries in the country, unlike the USA, where the refineries are closing.
According to analysts’ forecasts, by the end of this year the total capacity of Chinese refineries may reach 1.2 million barrels per day. Moreover, the development of the industry is not affected by the situation in the world market. As a result of falling demand for raw materials, many companies had to reduce the volume of oil production to 1.7 million barrels per day, which was a record low for the segment. The biggest reduction was experienced by American producers, which is observed in the world market.
According to the statistics provided by the Customs Department of China, in 2020 the country increased oil imports by 10.6%, gas supplies increased by 4.7%. During the sharp decline in the cost of energy resources, China began to actively buy raw materials, spending on imports of more than 150 billion dollars. And despite the larger purchase of fuel, the country managed to pay 24.5% less than in 2019.
China has shown excellent results in the recovery from the pandemic. Over the past year, it managed not only to compensate for losses, but also to show growth. China’s economy grew by more than 1%, making it the only state that increased the pace of development.
Saudi Arabia and Russia are among the main oil suppliers to China. Over the past year, they significantly increased exports, even though global demand fell. Saudi Arabia sold about 1.7 million barrels per day to China, Russia exported slightly less, and Iraq supplied 1.2 million barrels per day to the country. Now Russia and the Saudis are competing for who will be the main seller of oil and gas to China.
