China on track to overtake the United States as the world's biggest oil importer

Oil pumps in Daqing, Heilongjiang province.
Oil pumps in Daqing, Heilongjiang province.PHOTO: AFP

SINGAPORE (Bloomberg) - The world's biggest oil importer. The title nobody wants.

For decades the U.S. held undisputed rights to the crown. Last year, China squeaked ahead for the first time amid growing demand and as rising U.S. shale production displaced overseas deliveries. The Middle Kingdom looked poised to become the centre of the crude importing world.

Then US$30 oil happened. U.S. drillers shut the most rigs in modern history, production began to fall and imports have rebounded. Chinese oil firms also shuttered output and kept demand growing. Now the two are neck and neck.

"I don't think any country would want to boast about being the world's largest importer of crude," said John Driscoll, chief strategist at JTD Energy Services Pte in Singapore. "Who gets more nervous during OPEC meetings? Who's more vulnerable to supply disruptions, geopolitics or resource nationalism?" The one group with no reason for dismay is the Organization of Petroleum Exporting Countries, which needs buyers to soak up a supply glut that has cut prices in half from two years ago.

The U.S. imported 8.04 million barrels of oil a day in March, according to the Energy Information Administration, the most since August 2013 and about 330,000 more than China did in the same period. U.S. output has fallen 5.9 percent since peaking in April 2015, and drillers have idled 80 percent of the country's oil rigs since October 2014.

The increase in U.S. imports comes after years of declines due to increased shale production. Meanwhile Chinese economic growth has boosted imports four-fold since the beginning of 2005, making the country the second-largest consumer in the world. China imported more oil than the U.S. in a month for the first time in April 2015 and again in February.

China's crude production dropped by the most in 15 years in May as producers from PetroChina Co. to Cnooc Ltd. reduce drilling in unprofitable fields. Lower domestic output will increase the country's dependence on imports from the Middle East and Russia, Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong said in an e-mail. China also recently allowed smaller independent refineries, known as teapots, to begin importing oil directly, creating new buyers.

"I don't see the U.S. overtaking China on a consistent basis," said Amrita Sen, chief oil economist for Energy Aspects Ltd. in London. "Especially since China now has sustainably higher crude demand from teapot refineries."