According to Goldman Sachs analysts, China's oil imports are expected to rise only moderately by about 600,000 barrels a day in the fourth quarter compared to the previous three months. As reported by Bloomberg, this projection suggests that crude prices remaining elevated will continue to keep Chinese purchases subdued. The market currently views a sharp recovery in Chinese purchases as a likely trigger for materially higher oil prices, but Goldman believes this scenario is unlikely. The latest developments show China's retail gasoline price cap rising by 395 yuan ($58.85) per metric tonne, with diesel prices climbing by 385 yuan per tonne, as announced by the National Development and Reform Commission.
Despite the quarterly increase, Goldman forecasts that China's fourth-quarter imports will still be 3 million barrels a day lower year-on-year. According to the bank's analysis, while China's fourth-quarter imports will be higher than the previous three months, the year-over-year decline indicates a broader trend of reduced oil consumption. The bank estimates that a 1 million-barrel-a-day change in Chinese net crude imports sustained over six months would move Brent's estimated fair value by about $4 a barrel. The ongoing fuel price increases reflect sustained growth in global oil markets, with Brent crude remaining above $100 per barrel due to continued security concerns in the Persian Gulf.
To ensure supply stability amid rising crude prices, Beijing has instructed domestic state-owned refiners such as Sinopec and PetroChina to operate at maximum capacity while limiting exports of refined fuels to maintain availability within the country. The government has also relied on imports from diverse pipelines in Central Asia and Russia, along with its large strategic reserves. China remains highly vulnerable to Middle Eastern supply disruptions as about 40% of its crude oil imports have historically travelled through the Strait of Hormuz, which continues to face shipping lane interruptions due to ongoing geopolitical tensions.
According to Goldman Sachs, Brent oil is up around 36% since the start of the US-Iran war in late February due to disruptions in the Strait of Hormuz. However, the bank emphasized that a slowdown in Chinese imports has helped prevent steeper gains. Goldman stated that a possible escalation of strikes on Mideast crude production and export infrastructure - not higher China imports - is the main upside risk to their crude price forecast. The bank suggested that Brent could edge lower if China's crude buying stays broadly unchanged and if the Middle East war doesn't escalate, as the market has likely priced in a meaningful rebound in Chinese imports.
