Saudi Arabia’s crude shipments to China are expected to rebound in October to a level with the August volumes of more than two-year highs, after Saudi state oil giant Aramco slashed the price of its crude for Asia next month.
Aramco is expected to ship as many as 51 million barrels of Saudi crude to China in October, multiple trade sources told Reuters on Thursday.
This volume is equal to 1.65 million barrels per day (bpd) of Saudi exports to China, the world’s top crude importer, and would be on par with the August levels when the Saudi shipments hit their highest level since April 2023.
To compare, Saudi Arabia is sending 43 million barrels of crude, or 1.43 million bpd, to China in September. That’s down from the two-year high in August, after the Kingdom raised its September prices to Asia for a second consecutive month.
Early this week, however, Saudi Arabia slashed the price of the crude oil it will sell to Asia next month. The premium for the flagship Arab Light grade was set at $2.20 a barrel over the Dubai/Oman benchmark for cargoes to be delivered in October. The price was cut by $1 per barrel compared to September—a steeper cut than the $0.40 to $0.70 per barrel reduction analysts had expected.
The prices of other Saudi grades were also cut for Asia for October, by between $0.90 and $1.00 per barrel.
This week’s deep price cut, which followed OPEC+’s announcement it is tapping the last layer of production cuts of 1.65 million bpd, is likely the result of the renewed Saudi strategy to reclaim market share in the world’s top crude-importing region.
The Saudis are also reportedly asking Asian buyers at the APPEC conference in Singapore this week to buy more Saudi crude for October loading after the world’s top crude exporter slashed its prices for Asia for next month, anonymous sources told Reuters on Thursday.
By Charles Kennedy for Oilprice.com
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