Moody’s Investors Service on Wednesday downgraded China’s credit rating to A1 from Aa3, changing its outlook to stable from negative, citing concerns efforts to support growth will spur debt growth across the economy.
That could be problem for the oil industry that has been propped by the East Asian giant.
“Without China, the oil market cannot survive,” said industry consultancy FGE’s founder and chairman Fereidun Fesharaki at a Center for Strategic and International Studies discussion in Washington D.C. on Tuesday.
Asian demand for crude has grown he added, even as Middle Eastern demand growth has fallen due to reduction in energy subsidies across most countries.
Meanwhile, production has been falling in China, spurring greater imports, he noted.
China imported 34.39 million tons of crude oil in April, about 8.4 million barrels a day and up 5.5 percent from a year ago, Reuters reported.
This is as China’s domestic crude oil production fell 3.7 percent in April from a year ago to 15.99 million tons, or 3.89 million barrels a day. Output for the first four months was down 6.1 percent from a year ago, Reuters reported.
Fesharaki said China is likely to import a additional 900,000 barrels of oil a day this year over 2016.