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Saudi Arabia is not ceding ground in its important markets in Asia amid the OPEC cuts, and has regained its position as top oil supplier to China in January, overtaking Russia which was last year’s biggest supplier to China after having pushed the Saudis from the top spot.
In January, Russia was overtaken not only by Saudi Arabia, but also by Angola, China’s second biggest oil supplier, according to data by the Chinese General Administration of Customs reported by Reuters on Friday.
Saudi Arabia’s exports to China jumped by 18.9 percent from a year ago in January to 1.18 million bpd. Angola’s exports to China soared 63.5 percent to 1.17 million bpd, winning it second place, whereas the winner of the 2016 exports race—Russia—came in third place, shipping 1.08 million bpd to China in January, up 36.5 percent on the year.
Last year, Russia overtook Saudi Arabia as China’s biggest supplier of crude oil thanks in large part to increased demand from independent refineries, popularly called teapots. The average Russian exports to China in 2016 stood at 1.05 million bpd, up by 25 percent from 2015. Saudi Arabia’s shipments last year inched up 0.9 percent to 1.02 million bpd.
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Now the OPEC cuts have made the Middle Eastern crude grades more expensive and the Brent/Dubai and WTI/Dubai spreads narrower, which is making traders ship more crude oil from West Africa to Asia, and the Russian grade Urals to China, which would not have been a profitable shipment if it were not for the arbitrage window.
Although it is overcomplying with the OPEC deal and has cut exports to some clients -- mostly to regions other than Asia -- Saudi Arabia has been keeping full supplies to Japan and South Korea, and slightly cutting to Southeast Asia. However, for March, Saudi Aramco’s major buyers in both Northeast Asia and Southeast Asia are set to receive full-term allocations for Saudi crude oil, S&P Global Platts reported last week, citing traders it had contacted.
By Tsvetana Paraskova Oilprice.com
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Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…