China Surges to New Heights in Offshore Oil and Natural Gas Production

China: China has reported a surge in offshore Crude oil and Natural gas production during the first quarter of 2021. According to the latest data released, oil production went up by 3.8%, while Natural gas production increased by 6.5%. This increase is part of the growth recorded in the country's marine economy, which rose by 5.1% during the same period. The marine economy sector currently accounts for over 8% of China's GDP for the first quarter.

China has been active in boosting its domestic production of oil and Natural gas to reduce its overwhelming dependence on imports. Despite these efforts, imports remain essential for the economy, accounting for a substantial portion of total consumption.

It is expected that Crude oil imports will skyrocket to an all-time high this year as China lifts Covid lockdowns and reopens. China's oil imports may escalate to 11.8 million barrels per day (bpd) in the current year. The demand for oil in China is anticipated to increase by 1 million bpd, contributing significantly to the expected 2.6-million-bpd global growth in oil consumption.

If the world's leading importer of Crude oil experiences high-growth, oil demand could surge up to 1.4 million bpd, which is 400,000 bpd higher than the base case. This could drive the oil prices up by $3-$5 per barrel compared to the base case. Two months ago, the imports were at 12.3 million bpd, marking the highest level in the past three years and a 22.5% increase from the previous year.

For the first quarter, China’s Crude oil imports rose by 6.7% compared to the same period in 2022. According to the latest news, oil bulls primarily rely on China for making trading decisions. The prevailing anticipation is for a robust economic recovery in tandem with increased travel activities, leading to heightened fuel demand.

The economic rebound, however, has not been as straight of a line as many have expected, with the latest PMI (Purchasing Manager Index)reading for the country’s manufacturing sector indicating a contraction in activity.