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.
Sinopec, the biggest refiner in Asia, and its Fujian Refinery joint venture with Saudi Aramco, are among refiners that plan to reduce their intake of Saudi crude in September, according to Reuters’ sources.
The lower expected shipments would come as Saudi Aramco last week raised the official selling prices (OSPs) for its crude loading for Asia in September as it bets on robust demand.
The flagship Saudi grade Arab Light will sell in Asia next month at a premium of $3.20 per barrel above the Oman/Dubai average, the Middle East benchmark, off which shipments to Asia are priced.
The hike is $1.00 a barrel above the August price, as well as the second consecutive rise in the price of Arab Light loading for Asia.
Saudi Arabia also lifted the official selling prices (OSPs) for the other grades, Arab Extra Light, Arab Medium, and Arab Heavy, by between $0.70 and $1.20 per barrel above benchmarks.
The second consecutive increase in prices suggests that Saudi Arabia expect continued robust demand in its key exporting region, Asia, in the coming weeks.
A potential reduction of Russian supply to India, due to the new tariffs, could also boost the demand for Saudi and other Middle Eastern crude shipments to Asia next month and going forward.
By Tsvetana Paraskova for Oilprice.com
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