Saudi Arabia’s crude oil exports to China are set to decline for the third consecutive month in July, reaching around 36 million barrels. This reduction underscores the challenge the world’s top oil exporter faces in maintaining its market share in the world’s largest crude import market.
The July exports are expected to be down from approximately 39 million barrels in June, potentially reaching the lowest levels for the year, according to several trade sources.
The sources revealed that one state refiner and a private refiner have cut their nominations for Saudi crude in July compared to June. This is due to high term prices for Saudi crude and weak refining margins, which have led Chinese refiners to opt for other, cheaper sources of oil.
This reduction in Saudi oil exports to China comes despite Saudi Aramco lowering its official selling prices for crude exports to Asia in July, the first such cut in five months.
Sinopec, Asia’s largest refiner and Saudi Arabia’s biggest customer in China, is keeping its July volume little changed from the previous month, but the volume is the lowest so far this year.
The decline in Saudi oil imports to China is in contrast to the increase in imports from Russia, China’s top oil supplier. In the first four months of this year, China’s Saudi oil imports fell by 16.5% to 26.13 million metric tons (1.58 million barrels per day), while imports from Russia gained 16.6% to 37.79 million tons.
However, the sources also noted that Saudi Aramco will supply full contractual volumes to at least three other North Asian refiners in July.
The reduction in Saudi crude oil exports to China highlights the challenges faced by the world’s top oil exporter in maintaining its market share in the crucial Chinese market, as refiners seek out cheaper alternatives amid the ongoing global economic uncertainty.