China’s refiners are expected to import lower volumes of Saudi crude in September in a sign that Asia is in the midst of a major oil trade re-routing, with more Russian crude set to find Chinese buyers after India’s pullback.
Saudi Arabia will ship lower volumes of its crude to China next month, down from a two-year high this month, after the Kingdom raised its September prices to Asia for a second consecutive month, Reuters reported on Monday, quoting trade sources at Chinese refiners.
Saudi Arabia, the world’s biggest crude oil exporter, is expected to deliver about 43 million barrels of crude to China in September, according to a Reuters estimate of allocations for refiners.
This is equal to 1.43 million bpd of Saudi shipments to the world’s largest crude oil importer next month, down from an estimated 1.65 million bpd, which Saudi Aramco has allocated to Chinese refiners for August.
The decline in nominations of Saudi crude for September suggests Chinese refiners have enough stockpiles and see more Russian crude available, especially of the Urals blend that was mostly going to India until a few weeks ago, consultants Energy Aspects said in a note carried by Bloomberg.
Interest in Russia’s Urals is rising in China as it continues to be the “most competitive” grade compared with similar Middle Eastern crudes, according to Energy Aspects.
Russia’s Urals is now being offered at discounts in China amid uncertainties over Indian purchases of Moscow’s oil following the additional U.S. tariffs on India over its imports of Russian oil.
So far, China has been the top buyer of Russian crude, but most of its imports consist of the ESPO grade shipped from Russia’s port of Kozmino in the Far East. Urals, on the other hand, is being shipped from the ports in western Russia to India and China hasn’t imported much of the grade due to higher shipping costs and longer voyages.
However, with the hiked U.S. tariffs on India over its imports of Russian crude, trade flows to Asia’s top crude buyers have started to shift.
By Tsvetana Paraskova for Oilprice.com
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