OIL: China Import Quotas to Sustain Sanctioned Crude Imports: Vortexa

China’s larger allocation of crude imports in the final batch of quotas this year reflects the enforcement of the fuel oil consumption tax and improved refining margins in Q4, Vortexa said.

• China issued its final batch of crude import quotas last week, totalling more than 7.5mt and notably higher than the 6mt released in the same batch last year,
• The fuel oil consumption tax reduced willingness of independent refiners to run non-crude feedstocks, accelerating their use of existing crude quotas.
• More teapots applied for extra quotas as margins improved amid deeper discounts on sanctioned crude grades due to sanctions.
• The new quotas are expected to sustain but not raise China’s sanctioned crude seaborne imports and will be partly used to draw down inventories. Robust imports this year have partly accumulated in onshore - including bonded – storage.
• Fuel oil imports are likely to decline through December as crude becomes more accessible again.

Source: Vortexa