West African oil exports to China are expected to fall dramatically next month, by as much as 10 million barrels, according to oil traders interviewed by Bloomberg. If this happens (and it is speculation at this point) it would reduce West Africa’s monthly volume to China to levels not seen since January 2012.
The radical downturn is due to the sudden drop in Chinese manufacturing due to the ongoing COVID-19 crisis that crippled industrial output for the past several weeks. Even though the government is now trying to get the factories going again, it will take time so the country’s demand for oil is expected to remain flat or decline for the foreseeable future.
That said, some traders expect the situation to deteriorate further amid reports that Chinese banks have frozen credit lines to a number of independent refineries, known in the industry as “teapots,” in the northern province of Shandong.
