Alexey Gromov, Principal Director on Energy studies of the Institute for Energy and Finance, commented on the prospects for increasing demand for Russian oil in the Chinese market to the web portal "Oil and Capital".
Alexey Gromov said that China has officially set a goal to bring the volume of refining of the Celestial Empire to 1 billion tons of petroleum products per year. Given the fact that by the end of 2022, the maximum refining capacity in China has increased to almost 920 million tons per year, the country is confidently moving towards this goal. At the same time, Beijing does not need more.
"Everyone understands that having reached the mark of 1 billion tons of petroleum products per year, the industry in China will stop the increase in capacity, which lasted almost ten years. Why not allow more fuel to be exported in such conditions? It is quite possible that the Chinese authorities keep in mind the situation in the Middle East. If suddenly there is an escalation of the conflict, which, unfortunately, cannot be completely ruled out, then there may be interruptions in the black gold supply from the region. In such conditions, it is better for China to have a stock of petroleum products on its territory. Suddenly there will be a shortage of oil, then these reserve oil products will be useful for the domestic market.
The demand for oil from Chinese refineries in the fourth quarter will be guided by the requests of the Chinese domestic market. Of course, this will affect Russia, but do not exaggerate. Russian grades are the most in demand in terms of physico-chemical parameters for China's oil refining. In this regard, Iranian and Saudi oil can compete well with it. The only question is who will be able to offer the best price for Chinese refineries. It seems to me that Saudi Arabia, which is used to trading black gold in China at market prices, and sometimes with a premium, will be the first to fall out of such a struggle. Now Saudi Aramco promises that it will keep the price of its oil for Asian buyers. This should already be considered an achievement. But Iran and the Russia can increase discounts", Gromov noted.
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