Saudi Arabia’s crude oil flows to China are expected to stay at a one-year high of about 48 million barrels in June—roughly the same volume arriving in China from the world’s top crude exporter this month, trade sources told Reuters on Tuesday.
Following the OPEC+ decision to continue boosting production, the Saudi supply to the world’s largest crude oil importer is set to remain at a year-high for the month of June, according to Reuters data of the allocations to Chinese refineries.
Sinochem and private refiners, including Rongsheng Petrochemical and Hengli Petrochemical, have been allocated higher volumes for June compared to May. But the top Asian refiner, Sinopec, and another state-held firm, CNOOC, are set to receive lower supply from Saudi Arabia, according to Reuters’ trade sources.
In May, Saudi exports to China were expected to jump to 48 million barrels from the 35.5 million barrels in April, after the Kingdom slashed crude prices for May for Asia, just ahead of the 410,000-bpd increase from the OPEC+ group planned for May.
Last week, Saudi Arabia raised the price of its flagship crude grade loading for Asia in June, just as the Saudi-led OPEC+ group decided to continue easing the production cuts by adding a larger-than-expected volume to the market in June, too.
In a sign that the world’s top crude oil exporter expects solid demand in Asia next month, the Kingdom lifted the price of the Arab Light crude grade for June by $0.20 per barrel over May prices to a premium of $1.40 a barrel over the Oman/Dubai average, the benchmark off which Middle Eastern producers price their crude loading for Asia.
China, for its part, accelerated its crude oil imports in March and April. But the increased purchases this spring aren’t necessarily a sign of recovering fuel demand. It’s more likely that Chinese refiners are aggressively stockpiling cheaper crude amid uncertainties about sanctioned barrels going forward, analysts say.
By Charles Kennedy for Oilprice.com
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