Saudi Arabia is expected to ship in January the highest crude oil volumes to China in three months, after the world’s top crude exporter cut its prices for Asia for next month, trade sources told Reuters on Thursday.
Saudi Arabia plans to ship a total of 46 million barrels of crude oil to the world’s largest crude importer in January, the highest volume since October.
January deliveries will be significantly higher than the 36.5 million barrels expected to be shipped from Saudi Arabia to China in December. This month will see a second consecutive month of lower Saudi deliveries to China.
Sinopec and PetroChina, two state-held refining giants, as well as private refiners Rongsheng Petrochemical and Shenghong Petrochemical, are expected to lift higher crude volumes from Saudi Arabia in January compared to December, according to Reuters’s sources.
Demand for Saudi crude in China has increased in recent weeks after two consecutive months of price cuts by the Kingdom following signs of weaker demand and weakening Middle Eastern oil benchmarks. Higher prices for Iranian supply in China and uncertainty about future Iranian volumes in view of the incoming Trump administration have also pushed up demand for Saudi crude among Chinese refiners.
This weekend, Saudi Arabia cut the official selling price (OSP) its crude oil for deliveries to Asia in January in a move that was largely expected amid depressed global prices.
Aramco lowered the official selling price for its flagship Arab Light crude blend from a $1.70 premium to the Oman/Dubai average for this month to a premium of $0.90 per barrel for January. Expectations for the price cut ranged between $0.70 and $0.90 per barrel.
The move was prompted by weaker-than-expected demand from Saudi Arabia’s key oil export market: Asia. The Saudis are the biggest suppliers of oil to Asia and with demand disappointing, a move on pricing was all but certain to take place.
By Tsvetana Paraskova for Oilprice.com
