As the oil market ended the week with prices lower by 3 percent, the world looks to the Chinese economy for signs of underlying problems, being the second largest oil consumer in the world. (Photo : Twitter)
China's oil production has struck a seven-year low in October, raising fear about increasing dependency on foreign oil.
The country's oil production output for October dropped 11.3 percent from the same period last year, according to the National Bureau of Statistics. The daily production level of 3.78 million barrels for the month is a step down from 3.89 million barrels daily in September and is the lowest level since May of 2009, Forbes reported.
Experts attributed the low production to the slump in prices, which has forced state-owned companies to cut back on their output. The country's largest producer PetroChina, for instance, reported that its production of around 696.6 barrels from January to September of 2016 was a significant drop from its production of 722.9 million barrels from last year.
While the price of oil did move up past the $50 per barrel mark in October, it was not enough to convince Chinese oil companies that the price markup would last. Experts said that the country's oil output could likely go back to previous levels once the worldwide prices go up past the $60 mark.
Maturing oil fields and aging infrastructure have also been cited as another reason for the decline in production.
Meanwhile, Chinese companies' efforts to penetrate the lucrative United States energy market could face new challenges following Donald Trump's victory in the U.S. presidential elections earlier this month, The Wall Street Journal reported.
According to David Wochner, an analyst from law firm K&L Gates, the unpredictability of Trump's economic policies have led to uncertainties on the chances of Chinese oil companies to be able to enter the domestic market.
Trump has repeatedly stressed during the campaign period that he will impose heavy tariffs on China and declare it as a currency manipulator, moves that could potentially further strain the relationship between Washington and Beijing.
Chinese oil companies have repeatedly tried to enter the U.S. market in recent years but with little success. In 2005, China National Offshore Oil Corporation embarked on a failed attempt to take over U.S.-based Unocal Corp., which was met by heavy anti-China sentiments similar to Trump's.
