Weak demand in China is expected to lead Saudi Arabia, the world’s largest oil exporter, to reduce its crude supply to China, the largest oil importer, in December, sources told Reuters on Monday.
This reduction comes despite Saudi Arabia’s decision to lower its official selling prices (OSPs) for crude oil shipments to Asia in December.
Saudi oil deliveries to China will drop for the second consecutive month in December, with a total of 36.5 million barrels expected. This is a decrease from 37.5 million barrels in November and 46 million barrels in October, according to Reuters’ trade data. The volume of Saudi oil supplied to China in December is set to be the lowest since July, as state-owned Chinese companies, including PetroChina, Sinopec, and Sinochem, plan to import fewer barrels.
Saudi Aramco, the Kingdom’s state-owned oil company, last week lowered the price of its crude for Asia-bound shipments in December. The price of Saudi Arabia’s benchmark Arab Light crude was reduced by 50 cents per barrel, now set at $1.70 above the Dubai/Oman benchmarks, which are used to price Middle Eastern crude in Asia.
Saudi Arabia also cut the OSPs for its other crude grades—Arab Extra Light, Super Light, Arab Medium, and Arab Heavy—though the reductions for heavier crudes were smaller than those for lighter grades.
Chinese crude imports have been disappointing this year. October marked the sixth consecutive month in which China’s crude oil imports were lower than in the same month the previous year, according to official data. A slowdown in refining capacity at PetroChina’s refinery and continued weak demand from independent Chinese refineries, known as teapots, contributed to the drop in imports.
The weaker-than-expected demand from China may also explain why the OPEC+ group delayed its planned easing of production cuts from December 2024 to January 2025, although the group did not provide a specific reason for the change.
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