Cargoes from kingdom to China slumped 41 percent last month from March
Saudi Arabia’s loss of oil market share in China last month to Russia and Iraq is likely to be fleeting, with analysts saying shipments from the kingdom to Asia’s largest economy are rebounding in May.
Saudi crude exports to China could more than double to 10 million tons this month from April, according to ship-tracking firm Vortexa Ltd., with lead Asia analyst Serena Huang saying they will dwarf Russian seaborne volumes.
The world’s biggest oil exporter is typically the biggest source of China’s crude imports, but its cargoes to the country slumped 41 percent last month from March, according to tanker tracking data compiled by Bloomberg. That put it in the unusual position of being the third-biggest supplier behind Russia and Iraq for seaborne shipments.
The forecast increase in cargoes to China comes even as Saudi Aramco cuts the amount of crude it allocates to Asian buyers in line with the OPEC+ deal to curb output. However, the state-owned company was even more aggressive in reducing the amount of oil it supplies to US and European customers.
“It was clear that Saudi was targeting to increase its market share in the West during April,” said Rahul Kapoor, head of commodity analytics and research at IHS Markit in Singapore. “Saudi is now reducing output and shipments, but is expected to focus on China again.”
China’s recovering economy also looks set to benefit Saudi suppliers after demand uncertainty from the coronavirus advantaged Russian producers. Chinese independent refiners bought spot volumes from Russia’s eastern ports last month as the shorter-delivery period offered greater flexibility , said Liu Yuntao, an analyst at Energy Aspects in London.