MOSCOW, February 18 – RIA Novosti, Natalia Dembinskaya. Oil demand has skyrocketed in China. Saudi Arabia was the main supplier, but Russia is taking the lead, offering good discounts. Local refineries ranked for petroleum products. For Riyadh, this was a complete surprise.
took the lead
In 2022, Moscow significantly increased its supply of hydrocarbons to China and India. Key Asian economies were actively absorbing raw materials lost by the European market. But in China, Saudi Arabia still held the lead.
According to Chinese customs, 86.25 million tons of oil came from Russia – 1.72 million barrels per day, which is eight percent more than in 2021. The Chinese bought 87.49 million tons from the Saudis.
The world’s second economy is heavily dependent on energy imports: up to 72% of oil and 45% of natural gas comes from abroad.
Therefore, no fuel is superfluous for Beijing. Russia is already the leader in China from May to July 2022. In August, however, Saudi Arabia regained the summit.
Observers guessed: it won’t take long. With the market reopening after the Covid restrictions, the Saudis will face tougher competition from OPEC+ partner Russia.
extreme greed
And so it happens. The Chinese economy is booming, passenger traffic is increasing, traffic is increasing, and the huge oil refining industry is gaining momentum. Consumption is expected to increase rapidly.
According to the forecasts of the International Energy Agency (IEA), global oil demand in 2023 will increase increased by 1.9 million barrels per day, reaching a record 101.7 million.
The largest manufacturer is rubbing their hands: state-owned Saudi Aramco has already increased the price of its flagship Arab Light blend by 20 cents per barrel. For Chinese refiners, this is an extremely unpleasant surprise. Processors, on the contrary, relied on raw materials to become cheaper. All in all, while real demand lags behind optimistic forecasts.
Affordable prices
As a result, the alignment of forces could change as early as the second quarter. And it won’t just happen in China. Asia will rely on Russian raw materials.
“Chinese refiners will have to maximize their spot purchases from the US and Brazil, Angola and Nigeria, and above all Russia,” OilPrice said.
Moscow has good discounts and Riyadh had to make room. According to Refinitiv Oil Research, in January, China bought 2.03 million barrels of Russian oil per day, and Saudi oil – 1.77.
According to Bloomberg forecasts, the next large-scale purchases of Russian raw materials by Chinese giants PetroChina and CNOOC are coming. As a result, daily imports will add another half a million.
Add fuel
This also applies to oil products from Russia, which Europe openly rejects. Independent Chinese refineries are already chasing fuel.
Moreover, even before the European embargo that came into effect on February 5, Moscow diverted a significant portion of its fuel oil and vacuum kerosene (VGO) exports to Asia and the Middle East.
Although China is a net exporter of refined fuels, many refineries convert fuel oil into high value-added diesel and gasoline. Reuters also notes that the cheapness of the Russian product and the absence of crude oil import quotas for private businesses should also be taken into account.
According to Kpler, China purchased a record 3.89 million barrels of fuel from Russia in January. And March deliveries are estimated to nearly double to 6.75 million.
Analysts say: Moscow and Riyadh faced off in a tough fight for the world’s largest importer of crude oil. So far, Russia is winning.
Source: Ria
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