Saudi Arabia sealed deals with Chinese oil importers that will see the Kingdom's exports to China rise to 1.67 million barrels daily in 2019, Reuters reports, citing a statement from state oil giant Aramco.
According to official figures from Riyadh, China is the biggest importer of its crude oil, but Saudi Arabia is no longer the biggest oil supplier for China. Russia took its place two years ago. Even so, China remains a major destination for Saudi oil, hence the five contracts that will see its shipments there increase.
According to The National, the five contracts are a move, as per the Aramco statement, to "focus on customer diversification, strategic relationships, and tapping regional demand previously not supplied by Saudi Aramco. They are critical to diversifying Saudi Aramco's customer base and capturing a large share of China's future incremental oil demand, which will increasingly come from private refiners."
"Not only is this [agreement]...unprecedented for China, but rarely has a single country in Saudi Aramco's history bought so much oil. The new supply contracts make it very likely that Saudi Aramco next year will become China's largest supplier, a position it also held from 2006 until 2016."
Earlier this year, Aramco for a while curbed its exports to Asia to stabilize prices, but it seems, judging from the statement, that Aramco has prioritized building its market share in what is perhaps the top market for its crude oil and not a second too early, either.
Last month, China's crude oil imports hit a historic high at 9.61 million barrels daily as teapot refiners exited maintenance season and demand for fuels continued strong, boosting their profit margins and stimulating greater demand for imported crude. Over the first ten months of the year, China's oil imports rose by 8.1 percent on the year, while the October shipments alone surged by 32 percent on October 2017.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More