Asia’s imports surged in June to the highest level in two and a half years, but the rise isn’t necessarily attributable to strengthening oil demand after a soft start to the year.
Cargoes arriving in Asia in June were likely contracted six to eight weeks prior, in April, when oil prices crashed amid the OPEC+ production hikes plan and the U.S. tariff blitz.
Asia’s high crude imports in June helped first-half imports rise by 620,000 barrels per day (bpd) from the first half of 2024, to average 27.36 million bpd so far this year, per data by LSEG Oil Research cited by Reuters columnist Clyde Russell.
Oil imports into Asia in June alone jumped to 28.65 million bpd, the highest monthly import level since January 2023. The crude cargo arrivals in June were up compared to Asia’s 27.3 million bpd crude oil imports in May and 26.42 million bpd imported in June 2024, according to LSEG data.
In June, Asia’s top crude oil importers, China and India, saw their imports rise to the highest level since March this year.
The rise could be a sign of strengthening demand, but it’s also likely due to the low international oil prices in April, when most of the June-arriving cargoes were sold to Asia.
Oil prices dipped to a four-year low in early April, after US President Donald Trump announced tariffs on the world and escalated the trade war with China, seeking to negotiate trade deals from a position of strength.
The oil price decline in April was exacerbated by the OPEC+ group’s decision to accelerate the easing of the production cuts and hike output this summer by more than previously planned.
The oil market will see fairly soon whether the strong Asian crude oil imports in June were mainly the result of low prices two months earlier. The price hike this month due to the Israel-Iran conflict may have deterred buying activity for crude arriving in Asia in August.