(Bloomberg) -- China’s lead over the U.S. as the world’s biggest buyer of crude oil is poised to get bigger, and it’s largely thanks to teapots.
Dozens of small refiners, known as teapots to those in the industry, account for a third of the Asian nation’s processing capacity. They are now expanding as new rules will almost double the amount of crude the refiners, including Shandong Yongxin Energy Group, can import.
America, the world’s largest economy, is now the least reliant on foreign oil since 1994, while China is taking advantage of the slump in prices to expand its strategic stockpiles -- a strategy that help it overtake the U.S. as the biggest buyer last month. The flow of oil to Asia will help create a global supply deficit by the end of the year, according to Sanford C. Bernstein Ltd.
“The expected new crude import quota for teapot refineries will help bolster China’s appetite for foreign oil,” said Gao Jian, an analyst at SCI International, a Shandong-based consultant. “Crude imports this year will exceed 2014’s level.”
China bought a record 7.4 million barrels a day in April, up almost 17 percent from March and 3.1 percent from the previous high in December, customs data show. The U.S. imported about 7.3 million barrels a day, according to government figures.
The U.S. need for foreign oil is waning amid record domestic oil production. The Energy Information Administration forecasts the country will import an average 6.54 million barrels a day next year, down from 6.69 million in 2015. It received 6.99 million last year.
China’s record purchases are adding to signs of increasing demand that will create a global shortfall of 1.5 million barrels a day in the fourth quarter, Bernstein said in a May 27 report. That’ll drive up Brent crude prices to $80 a barrel, the researcher predicts. The European benchmark oil closed at $62.58 on the London-based ICE Futures Europe Exchange on Thursday.
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