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Goldman Sachs: China's Q4 Oil Imports to Remain Subdued, Limiting Global Price Hikes
- •Goldman Sachs predicts China's crude oil imports will stay subdued in Q4 due to elevated prices, moderating global oil price gains.
- •Chinese purchases are expected to recover only moderately in Q4, with imports rising by about 600,000 barrels a day from the previous quarter.
- •Analysts do not foresee a strong recovery in Chinese oil purchases, which the market had viewed as a trigger for significantly higher oil prices.
- •China's reduced buying has been a key factor in limiting crude price increases, despite conflicts like the US-Iran war pushing Brent higher.
- •Goldman identifies escalation of strikes against West Asian crude production, not stronger Chinese demand, as the main upside risk to oil price forecasts.
Key Questions Answered
Goldman Sachs expects China's crude oil imports to remain subdued in the fourth quarter, recovering only moderately with an anticipated increase of about 600,000 barrels a day from the previous three months. Despite this rise, imports are projected to remain roughly 3 million barrels a day lower than a year earlier.
China's subdued oil buying has served as an important factor limiting the rise of global crude prices, helping prevent a steeper increase while Brent rose about 36% amid the US-Iran war and Strait of Hormuz disruptions. Goldman Sachs estimates that a sustained 1 million-barrel-a-day change in China's net crude imports over six months alters Brent's estimated fair value by about $4 a barrel.
Goldman Sachs identifies a further escalation of strikes against West Asian crude production and export infrastructure as the main upside risk to its crude price forecast, rather than stronger Chinese demand.
