
China's surplus crude oil surges in June, giving refiners options
China's surplus crude amounted to 1.42 million barrels per day (bpd) in June, up from 1.40 million bpd in May and the fourth straight month above the 1 million bpd level, according to calculations based on official data.
For the first half of 2025 China's surplus crude amounted to 1.06 million bpd, as strong second quarter oil imports overcame a soft start to the year.
The volume of crude flowing into inventories gives Chinese refiners options in coming months, as they can choose to trim imports if they deem that oil prices have risen too quickly as a result of the Israel-Iran conflict last month.
China does not disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of oil processed from the total of crude available from imports and domestic output.
Refiners processed 15.15 million bpd in June, according to Reuters calculations based on official data released on Tuesday, up 8.8% from May and the highest rate since September 2023.
The world's largest importer of crude oil saw arrivals of 12.14 million bpd in June, the highest daily rate since August 2023, and up 7.1% from May.
Domestic oil production was 4.43 million bpd in June, up from 4.35 million bpd in May.
Putting June imports and domestic output together gives a total of 16.57 million bpd of crude available to refiners, leaving a surplus of 1.42 million bpd once refinery throughput of 15.15 million bpd is subtracted.
It is worth noting that not all of this surplus crude is likely to have been added to storage, with some being processed in plants not captured by the official data.
But even allowing for gaps in the official data, it is clear that from March onwards China has been importing crude at a far higher rate than it needs to meet its domestic fuel requirements.
China has built up a track record of importing more crude than it needs when it believes prices are low, but pulling back when prices rise.
The surge in imports in the second quarter came against a backdrop of declining crude prices when the cargoes would have been arranged.
Global benchmark Brent futures dropped from a high of $75.47 a barrel on April 2 to a four-year low of $58.50 on May 5, a period during which cargoes that arrived in the second quarter would have been secured.
Conversely, China's soft crude imports in the first quarter came after prices were rising during the window when those cargoes would have been bought.
Brent went from a low of $70.85 a barrel on December 6 to a six-month high of $82.63 on January 15, meaning China's refiners were facing rising import costs for cargoes arriving in the first quarter.
Brent prices have been volatile in recent weeks amid the brief conflict between Israel and Iran in June, which was later joined by the United States.
Brent reached a six-month high of $81.40 a barrel on June 23 and has since moderated to end at $68.71 on Tuesday, as concern mounts over the global economic impact of the higher import tariffs promised by U.S. President Donald Trump.
This volatility may result in China's refiners easing back on import volumes in August and September, but much still depends on whether the June spike remains a brief blip higher amid an overall declining price trend.
Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab.
The views expressed here are those of the author, a columnist for Reuters.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Guardian
14 minutes ago
- The Guardian
UK and Australia sign Aukus treaty to build nuclear submarines as Lammy downplays US doubts
Australia and the UK have signed a 50-year treaty to cement the Aukus pact to design and build a new class of nuclear-powered submarine. Australia's defence minister, Richard Marles, and the UK's defence secretary, John Healey, signed the deal – dubbed the 'Geelong Treaty' – in Geelong on Saturday, with Marles saying it was among the most significant treaties between the two nations. It came as the US, which is not a party to the treaty, wavers on its own role in the trilateral Aukus agreement, after the Trump administration launched a review to examine whether it aligns with his 'America first' agenda. A joint statement released by the UK and Australia said the treaty would enable cooperation on the SSN-Aukus submarine's design, build, operation, sustainment, and disposal, as well as workforce, infrastructure and regulatory systems. The SSN-Aukus is intended to incorporate technology from all three Aukus nations. It will be built in northern England for the UK Royal Navy, and Australia plans to build its own in South Australia for delivery to the Australian navy in the 2040s. The treaty is yet to be released publicly and will be tabled in parliament next week. Marles told reporters the treaty will underpin how the UK and Australia work together to deliver the submarines. He said there were three parts to the treaty, including training in the UK for Australian submariners and other required roles, and 'facilitating the development' of infrastructure at the Osborne Naval Shipyard in Adelaide. 'And finally, what the treaty does is create a seamless defence industrial base between the United Kingdom and Australia. This project is going to see Australian companies supplying into Great Britain for the building of submarines,' he said. 'It will see British companies supplying to Australia for the building of our own submarines here in Adelaide. Healey said the treaty would support tens of thousands of jobs in both Australia and the UK. 'It is a treaty that will fortify the Indo-Pacific. It will strengthen Nato and we're the politicians signing it today. But this is a treaty that will define the relationship between our two nations and safeguard the security of our country for our children and our children's children to come,' he said. Marles said the deal was 'another demonstration of the fact that Aukus is happening, and it is happening on time, and we are delivering it'. 'It's a treaty which will last for 50 years. It is a bilateral treaty which sits under the trilateral Aukus framework.' As part of the existing Aukus agreement, Australia will pay about $4.6bn to support British industry to design and produce nuclear reactors to power the future Aukus-class submarines. It will pay a similar amount to the US to support America's shipbuilding industry. Under the $368bn Aukus program, Australia is scheduled to buy at least three Virginia-class nuclear-powered submarines from the US from the early 2030s. Earlier on Saturday, the UK foreign secretary, David Lammy, appeared at an event in Sydney run by the Lowy Institute. Asked by the presenter if the UK was 'coming to the rescue because America is losing interest in Aukus', he said that wasn't the case, and that the deal was about '20,000 jobs between our two countries' and a secure partnership well into the future. Lammy dismissed concerns over the Trump administration's Aukus review, saying it would 'flush out any issues for them'. He said both the UK and Australian governments had also undertaken a review of the pact. 'All governments do reviews, and should do reviews, particularly when they involve big aspects of procurement and defence,' he said. Lammy said the world had entered a 'new era' of instability and that 'investing in defence is an investment in peace' because opponents 'realise that you are armed and capable'. The Trump administration's review is being headed by the Pentagon's undersecretary of defence policy, Elbridge Colby, who has previously declared himself 'sceptical' about the deal, fearing it could leave US sailors exposed and underresourced.


Daily Mirror
44 minutes ago
- Daily Mirror
State pension age review moves forward after discussion of increase to 69
The state pension age is already set to increase again from next year The possibility of the state pension age rising to 69 has edged closer as Labour announces another review of the state pension age. Legislation is already in place for the access age to gradually increase from the current 66 up to 67, between 2026 and 2028. Labour has now declared that there will be another review of where the state pension age should be set. The last review was conducted by Baroness Neville-Rolfe in 2022. Mark Pemberthy, benefits consulting leader at consultancy group Gallagher, highlighted that this past review made reference to the potential for further increases to the state pension age. He said: "The previous review of the state pension age in 2022 recommended that, on average, people should expect to receive the state pension for 31% of their adult life, and that the total cost of state pension related expenditure should be limited to 6% of GDP. "This review also anticipated a need to increase state pension age to 69 from 2046, although this has not yet been legislated for." The Government has outlined the key factors that the review will consider, which will include the idea of linking the state pension age to life expectancy and the role of the state pension age in keeping the state pension affordable and sustainable. However, Mr Pemberthy expressed doubt that there will be significant changes announced around these issues. He explained: "Life expectancy is a complex issue. For decades, life expectancy rose consistently. "This trend was halted by the COVID-19 pandemic and has stayed lower since – with 2024 life expectancy still lower than in 2019. But the average masks some wide variances based on occupation, gender, geography, and socioeconomics. "There is significant concern that further increases in state pension age could mean that some population groups do not get much opportunity to enjoy their state pension." He pointed out some of the issues around attempting to restrict spending on the state pension relative to GDP. The expert said: "Limiting the cost of state pension as a percentage of GDP is complex and will be dependent on a number of variables including how successful our economy is in the future and also how fast the state pension is increased each year. Currently this is the higher of inflation, earnings or 2.5% [under the triple lock policy] - all of which are significantly higher than our forecast GDP growth over the next few years. ""The triple lock will not be part of the state pension age review, but must be a consideration in the wider pension review if pensions are going to be sustainable for future generations." The full new state pension is now worth £230.25 a week, after payment rates rose 4.1 percent in April in line with the triple lock.


Reuters
44 minutes ago
- Reuters
Pony AI says it has permit for driverless robotaxi services in Shanghai area
July 26 (Reuters) - Chinese robotaxi operator Pony AI (PONY.O), opens new tab said on Saturday it had received a permit to provide fully driverless commercial robotaxi services in Shanghai's Pudong financial district. Pony AI will launch fully driverless ride-hailing services in the city, starting in the core business district of Jinqiao and Huamu before expanding to other regions, the company said in a statement.