SHANGHAI: The shifting dynamics of China’s crude oil imports show the scale of the challenges facing the Organization of the Petroleum Exporting Countries (OPEC) and its allies ahead of a decision on whether to continue with production cuts.
The detailed Chinese customs data for October illustrates trends that should give pause for thought to the leaders of OPEC and its allies, particularly major exporter Russia, ahead of the meeting in Vienna on Nov. 30.
Market share is the big issue for shippers to China, the world’s largest crude importer, and there are two strands to the problem.
The first is that the import data shows how China has been able to develop new relationships with oil exporters fairly rapidly, reducing reliance on some traditional suppliers from OPEC.
The second is that it appears that the burden of reducing exports, at least as far as China is concerned, isn’t being shared remotely equally by members of OPEC and their partners in output cuts.
This imbalance raises the chance that an extension to the overall output cuts first agreed a year ago will prove ineffective as some parties to the deal are tempted to export more in a bid to retain, or expand, market share.
