China, the world’s second largest economy, holds 24.6 billion barrels of proved oil reserves, which is the highest in the Asia-Pacific region (excluding Russia). Despite this, the country has been unable to meet its exponentially growing demand for crude oil. For instance, the country produced roughly 4.3 million barrels of oil per day (Mbpd) in 2015, which was significantly lower than the country’s demand of 11.6 Mbpd in the same year. This demand-supply mismatch has caused the country’s oil demand to grow at an annual rate of roughly 6% over the last 15 years, while its oil production increased at only 2% per year during the same period. Consequently, China’s share of the global oil demand has risen notable over the years, though its contribution in the global supply of oil has remained flat.
Additionally, China has been rapidly importing crude oil from other oil exporting countries in order to meet its increased demand for oil. For instance, the country imported almost 6.2 Mbpd in 2014 to bridge the supply deficit in that year. At the end of 2015, China accounted for more than 15% of the world’s crude oil imports. Based on the table below, we believe that China plays a crucial role in the determination of crude oil prices, since it significantly impacts the demand and supply of crude oil globally.
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