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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Russia Overtakes Saudi Arabia As The Largest Oil Exporter To China

Russia became the top crude oil supplier to China last month, overtaking Saudi Arabia with an average of 1.75 million bpd versus 1.26 million bpd for Saudi Arabia, Reuters has reported, citing customs data. In fact, last month Saudi Arabia fell to the third spot among Chinese oil suppliers, with Iraq taking number-two.

This compares with 1.66 million bpd of Russian oil imports in March and 1.7 million bpd of Saudi oil imports, A comparison of the monthly averages shows a substantial decline in Saudi oil supplies to the world’s top importer. At the same time, China’s March intake of Russian crude was 31 percent higher than a year earlier, and the April imports from Russia were 18 percent higher than a year earlier.

According to TankerTrackers.com data, Saudi Arabia exported 2.083 million bpd of crude to China in April, up from 1.065 million bpd in March. An issue that creates confusion, there is a difference between exported and imported crude shipments because of the different times when a shipment is logged as exported and when it is logged as imported into the target country. According to TankerTrackers.com co-founder Samir Madani, this difference for Saudi Arabia and China is between two and four weeks.

China is a key market for all crude oil exporters so it has naturally become a sort of battleground for the world’s top exporters given the rising tensions between Beijing and Washington, which are not exactly conducive to more U.S. imports of oil. Related: Turkey Headed For An Unexpected Victory Libya's Oil War

Meanwhile, in more good news for oil prices, China’s total oil imports for April were higher than they were in March, suggesting a stable recovery in oil demand. At 9.84 million bpd, the April average compared with 9.68 million bpd for March. The April figure, however, was lower than the average for April 2019, which stood at 10.64 million bpd.

Analysts believe, however, that Saudi Arabia’s loss of market share to Russian oil is only temporary. Speaking to Bloomberg, ship-tracking company Vortexa said Saudi shipments of crude to China could more than double in May from April, when they fell by 41 percent from March.

“It was clear that Saudi was targeting to increase its market share in the West during April,” IHS Markit regional head of commodities told Bloomberg. “Saudi is now reducing output and shipments, but is expected to focus on China again.”

According to data from TankerTrackers.com for the first 21 days of May, Saudi shipments of oil for China averaged some 1.87 million bpd.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on May 26 2020 said:
    China is the world’s biggest oil destination for global crude oil exporters. It currently accounts for 14% of global crude oil consumption, 15% of global crude oil imports and 80% of oil demand growth but only 4% of production.

    Therefore, it is no surprise that Russia the world’s largest crude oil producer and Saudi Arabia the world’s largest exporter should compete for market share in China.

    Saudi oil strategy is to enhance its market share in both China and the European Union (EU). However, Russia has been gaining market share at the expense of Saudi Arabia first because China has vested strategic interests with Russia and second because Russian piped oil exports to China are cheaper than Saudi shipped oil exports particularly at a time of rising shipping rates. Russia retains the same advantage in the EU for its oil and gas exports.

    Russia is of great interest to China not only because it is a major supplier of crude oil, gas and LNG to it but also because it is a quintessential partner under the China-Russia strategic alliance.

    Russia owns and runs oil and gas pipelines to China providing vast quantities of crude oil, natural gas as well as LNG. This helps China overcome issues of energy security related to crude oil shipments from the Gulf having to pass through the very critical chokepoints of the Straits of Hormuz and Malacca.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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