Russia and Saudi Arabia are vying for the top spot among crude oil suppliers to China, with Russia currently in the lead, but Saudi Arabia is doing its best to push ahead.
Analytic data cited by Reuters today shows that Russia exported an average of 1.7 million bpd of crude oil to China during the first 11 months of the year, with Saudi Arabia just a little bit behind, with an average export rate of between 1.6 million bpd and 1.7 million bpd.
The race continues as China has emerged as the only country in the world still thirsty for oil. An earlier report by Reuters this week said China had increased its imports of crude from Russia, the United States, and Angola over the past few weeks while elsewhere buyers are reducing their orders. What's more, China's imports are set to continue growing in 2021 as well, despite expectations of weak demand globally. According to the report, oil imports into China next year could hit 12 million bpd.
This year, after oil prices tanked because of the coronavirus pandemic, China's crude oil imports shot up, reaching an all-time high of close to 13 million bpd in June. In the following two months imports declined but relatively moderately, with the average remaining above 11 million bpd.
Exports for the current quarter are seen still weaker than those in the third quarter because of filling up storage space and still low fuel demand. However, it is in this quarter that Saudi Arabia could outpace Russia as a top exporter: for most of the year, Russia has been shipping more oil to China, but in November, Saudi Arabia was ahead of Russia.
"It looks like Russia has displaced Saudi Arabia to clinch the top spot this year," one analyst from Vortexa told Reuters. "It is a neck-and-neck race and it remains to be seen as to who will be the ultimate winner."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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Comments
Russia’s oil strategy is to enhance its market share in the two markets that matter most to it, namely China and the European Union (EU). Saudi oil strategy equally aims to enhance its market share in both markets at the expense of Russia.
However, Russia has been gaining market share in China 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.
Furthermore, 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