Chinese refiners are asking for less oil from Saudi Arabia, with the drop possibly pointing to a reshuffle of global flows as more Russian crude becomes available, according to Energy Aspects Ltd.
The drop in so-called nomination for September-loading term cargoes from Saudi Aramco indicated refineries were holding back from purchases given the greater availability of Russia’s Urals, as well as comfortable stockpiles, the London-based consultant said in an Aug. 11 note, without citing anyone.
The global oil market has zeroed in on a possible reordering of some crude flows after the US and European Union ramped up pressure against India over its imports of Russian energy. Given there’s been no comparable move against China, that’s raised the possibility that more of Moscow’s oil will be taken by mainland refiners, including Urals, which ships from Russia’s west.
Saudi Aramco is set to sell 43 million barrels of contractual supplies of September-loading crude to China, according to Bloomberg, which cited traders informed by the producer. That compares with 51 million barrels a month ago, and a monthly, year-to-date average of about 45 million.
Chinese interest in Urals is picking up given it remains the “most competitive” compared with similar Middle Eastern crudes, Energy Aspects said. Still, there’s a limit to China’s appetite given Russian imports account for 17 percent of overseas supplies, with 20 percent seen as a cap for a single country, it added.
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