maximax

Energy Subsidies and Levels of Demand

chinas crude oil imports amounted to something like 7.5-8.2% of total global crude oil imports in 2007, depending on your preferred data source, but the author underestimates the impact of China's subsidies on the crude marker prices which are light sweet grades. This is exactly what China's refineries need due to low plant complexities, and this is what is in short supply. The additional Saudi stuff is heavy stuff, not suitable for refining into middle distillates which is what the market currently craves, both in China and in the Western world. Also, traders think it matters so it does matter, for right or wrong. After the Chinese announcement the WTI front month contract dropped the most in a while, this cannot be said from the Saudi announcement to produce 200-500kb/d more in due course.