Saudi Oil Exports to China Set to Hit Two-Year High in August
Crude oil exports from Saudi Arabia to China are seen reaching the highest level in two years in August, Reuters reported today, citing half a dozen unnamed trade sources. The daily average, according to refiner allocation data seen by the publication, stands at 1.56 million barrels, for a total monthly volume of 51 million barrels. That’s despite the Saudis’ recent price hike for Asian buyers of their crude in August. Asian buyers will have to pay between $0.90 and $1.30 more per barrel of Saudi crude next month, while buyers in North America will enjoy the most modest price hike, by between $0.20 and $0.40 per barrel. The August average is just shy of the 1.57 million barrels daily in average Saudi oil exports to China for 2024. That number, in turn, was a sharp drop from the 2023 average, which stood at 1.72 million bpd. It was also an increase on July, when Saudi oil exports to China were estimated at a total of 47 million barrels, down from some 48 million barrels shipped in June. Appetite for Middle Eastern crude jumped among Asian buyers following the Israeli-Iran conflict from June, which pushed spot price premiums higher, making buyers bet more heavily on term deliveries from Middle Eastern producers, whose official selling prices became more attractive than spot market ones. China is a critical market for Saudi Arabia but it is just as critical for Russia and Iran, Saudi Arabia’s fellow OPEC+ members that have become the largest suppliers of crude to Chinese refiners, mostly thanks to the discount prices they are offering and the flexible terms. Russia and Iran supply oil mostly to independent refiners—the so-called teapots—while Saudi Arabia supplies state-owned refiners CNPC and Sinopec. Now, however, OPEC itself expects oil demand growth to weaken globally on the back of weakening in China, meaning the competition among oil exporters will likely intensify—unless the weaker demand forecast fails to materialize.
Oil Prices Set to End the Week Flat Amid Conflicting Signals
Crude oil prices recouped some of the losses they booked on Thursday today but looked set to end the week with little change, amid tariff worries, OPEC+’s decision to boost supply, and a threat of a diesel shortage in key markets, and the prospect of fresh U.S. sanctions on Russian energy. At the time of writing, Brent crude was trading at $69.16 per barrel, with West Texas Intermediate at $67.16 per barrel, both slightly up from opening, after they shed about 2% on Thursday, pressured by the latest tariff announcements from the White House. Earlier this week, President Trump declared he would impose a 50% tariff on imports from Brazil, saying President Lula da Silva’s government was mistreating former president Jair Bolsonaro, who is on trial on allegations of a coup against Lula da Silva. In a social media post, Trump said the tariffs were imposed in response “in part to Brazil’s insidious attacks on Free Elections, and the fundamental Free Speech Rights of Americans.” Lula da Silva has threatened reciprocal measures in response to the tariffs, after earlier in the week he referred to Trump as an “emperor” that the world does not need. The reference came in response to a media question about Trump’s threat to impose additional tariffs on all BRICS members if they engaged in what he called anti-American policies. On Thursday, Trump deepened tariff anxiety on markets by announcing a 35% tariff on imports from Canada, starting from next month. He added that the rest of the United States’ trade partners would be hit with blanket tariffs of between 15% and 20%. Meanwhile, OPEC revised down its oil demand forecast for next year, now seeing the total at 106.3 million bpd, down from 108 million barrels daily forecast earlier. The group attributed the revision to slowing demand growth in China. Meanwhile, the European Union, which is in the process of preparing yet another sanction package against Russia, is discussing the option of a “floating” price cap for Russian crude in light of volatile oil prices.