Oil price war between Saudi Arabia, Russia set to offer China’s coronavirus-hit economy welcome relief

China imported 72 per cent of its oil in 2019, with Saudi Arabia and Russia, who are now locked in a price war, its largest suppliers

Oil prices again fell on Wednesday, with Brent crude down to US$36 a barrel as Saudi Arabia moved to boost output capacity in an escalation of its price war with Russia

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China imported 506 million tonnes (3.7 billion barrels) of oil in 2019, an increase of 9.5 per cent from 2018, marking the 17th consecutive year of increased imports. Photo: AP

Published: 7:30pm, 11 Mar 2020Updated: 11:25pm, 11 Mar 2020

China’s coronavirus-hit industrial enterprises could receive a welcome boost from plunging oil prices, with the world’s largest importer and consumer set for significant cost savings, analysts said.

A total of 72 per cent of the oil consumed in China was imported in 2019, an average of 10 million barrels per day, meaning any sharp drop in costs as a result of the price war between Saudi Arabia and Russia will help firms reduce costs as they struggle to resume production.

“China benefits a lot from the price war as it is the world's biggest crude importer,” said Bai Jun, an economic committee member at the China Petroleum Society, an association of Chinese energy researchers.

China imported 506 million tonnes (3.7 billion barrels) of oil in 2019, an increase of 9.5 per cent from 2018, marking the 17th consecutive year of increased imports.

Lower oil prices should raise output by 0.3 per cent above what it would have been with higher oil prices. This will provide some relief, but is a small offset to the many other drags facing the economy

Julian Evans-Pritchard

Saudi Arabia and Russia topped a list, also including Angola, Iraq and Oman, that accounted for about 55 per cent of China’s total crude imports in 2018, according to China’s customs data.