In August, Saudi Arabia is poised to increase its crude oil exports to China, reaching their highest level in over two years.
The move by Saudi Arabia reflected the top exporter’s strategy to reclaim market share in the world’s largest oil importer.
Saudi Aramco, the state oil firm, is set to ship approximately 51 million barrels to China in August, according to a Reuters report.
This translates to 1.65 million barrels per day, according to a tally of allocations to Chinese refiners, the report revealed.
The increase in volumes in August would be 4 million barrels higher than the allotted volume this month, and the highest since April 2023, data from Reuters and Kpler showed.
Saudi Arabian oil finds its largest purchaser in China.
Sinopec to increase intake of crude
China’s state refiner Sinopec is poised to significantly increase its crude oil intake in August.
This move by Asia’s largest refiner comes as it ramps up its processing output, following the successful completion of extensive maintenance operations across several of its key plants during the second quarter.
The enhanced crude supply signals a strategic acceleration in production, aiming to meet growing demand and optimize operational efficiency after the scheduled shutdowns.
According to the report, allocations for other Chinese refiners remained consistent with the previous month.
As domestic crude demand is set to increase and Chinese consumption is anticipated to rise, Saudi Arabia, the world’s largest oil exporter, announced on Sunday a price hike of over $1 a barrel for Asian and European buyers for August.
Rising domestic demand in the Kingdom is likely to have a negative impact on the country’s oil exports as well.
Term crude supplies
The geopolitical tensions between Iran and Israel have sent ripples through the global oil markets, significantly impacting crude supplies to Asian refiners.
In June, the escalating conflict led to a sharp increase in spot market premiums, prompting Asian refiners to proactively seek more secure and predictable supplies.
As a direct consequence, these refiners have already submitted requests for increased term crude supplies from Middle Eastern producers for loadings scheduled in August and September.
This strategic move aims to mitigate the volatility of the spot market and ensure a stable flow of crude oil, crucial for their operations and to meet regional energy demands.
The heightened demand for term contracts underscores the market’s response to geopolitical instability, as participants seek to lock in supplies and manage potential price spikes.
An agreement by the Organization of the Petroleum Exporting Countries and allies to raise oil production by 548,000 barrels per day in August, as the group unwinds earlier voluntary cuts, has resulted in a higher supply to China.
The cartel, in a surprising move over the weekend, had agreed to raise oil output for August.
The group has been raising output by 411,000 barrels per day since May.
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