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China has issued an additional crude oil import quota of at least 5.84 million metric tons (116,800 barrels per day) to independent refiners for cargoes arriving by end-2024 and in early 2025, people familiar with the situation said.
The quotas are likely to lift China's crude imports heading into next year, after purchases rebounded in November, driven by sharp price cuts for shipments from Iraq and Saudi Arabia.
Refiners, including Hengli Petrochemical and some independents in eastern Shandong province, also known as teapots, have been notified that they will receive additional quota volumes for 2024, they said.
Of these, an estimated 3.84 million tons (76,800 bpd) were given to Shandong-based teapots, while Hengli received 2 million tons, the sources said.
These quotas are expected to be utilized by the end of this year, according to traders. It was not immediately clear if the new quota counts as volumes for 2024 or 2025.
The sources declined to be named as they are not authorized to speak to the media. China's Ministry of Commerce, which regulates crude oil imports quota, did not immediately respond to a fax for comment by Reuters.
Some teapots, hit by poor profit margins caused by weak demand this year, had been lamenting about insufficient quota which constrained their imports of feedstock for production.
The operation rates among teapots ramped up in the past three weeks as maintenance came to an end, and their margins improved thanks to rising production of gasoline and diesel, local consultancy Oilchem said.
China has set the import quota for crude oil at 243 million tons for non state-owned firms in 2024 and raised it to 257 million tons for 2025.
"The additional quotas will stir up some interest in prompt cargoes, particularly Iranian oil, which remains in the trading cycle for December arrivals," said Xu Muyu, a senior analyst at Kpler.
Prices of Iranian oil to China rose to multi-year highs this month as lower exports drove up prices amid concerns that Middle East tensions may disrupt supply. -Reuters