Saudi Oil Exports to China Set for Third Monthly Decline

According to the report, shipments of Saudi oil to Chinese buyers in July will come in at some 36 million barrels, down from 39 million barrels in June, which was in turn a decline on the 45 million barrels Saudi exported to China in May. The lower purchases will be driven by refinery maintenance and cheaper alternatives to Saudi crude.

The news about lower expected Saudi oil shipments to China comes after the Kingdom said it would cut its official selling price for Asia for July deliveries. The cut amounted to $0.50 per barrel from June prices.

The price cut suggested Saudi Arabia was focusing on market share rather than price, even after international benchmarks slid following the latest OPEC+ meeting. With maintenance season in China, however, the market share gain will have to wait.

Saudi Arabia used to be China’s biggest supplier of oil but last year Russia replaced it at the number-one spot. In 2023, Russia shipped 107.02 million metric tons of crude to China, which was a 24% increase on 2022. Saudi Arabia, on the other hand, exported 85.96 million tons to Chinese buyers last year, which was a 2% decline on 2022.

Overall Saudi exports, however, rose earlier this year. In March, these hit a nine-month high of 6.41 million barrels daily, according to data from the Joint Organizations Data Initiative reported in late May.

Saudi Arabia remains the largest oil supplier to Asia as a whole even if it dropped from the top spot in China. Even so, Asian buyers are diversifying away from Middle Eastern oil in favor of crude from the United States and Brazil amid shrinking margins and Saudi Arabia’s price hikes earlier this year.

By Irina Slav for Oilprice.com

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