Saudi Arabia is poised to increase its crude oil shipments to China in October, according to trade sources who spoke with Reuters on Thursday. This move follows the top crude exporter’s decision to lower its oil prices for Asian markets.
The Kingdom plans to deliver 46 million barrels of crude to China next month, up from the estimated 43 million barrels expected in September. China’s major state refiners, Sinopec and PetroChina, have requested additional supplies from Saudi Arabia for October, sources said.
Saudi Arabia has reduced its official selling prices (OSPs) for October due to declining refining margins in China and the broader Asian region, along with weaker Dubai benchmark prices. The price of Saudi Arabia’s Arab Light crude for Asia in October has been cut by $0.70 per barrel compared to September. This price reduction has led to increased demand from China’s largest refiners, while nominations from major private refiners with import quotas have remained steady.
Asian refiners anticipated lower Saudi crude prices for October, reflecting the weak refining margins across the top importing region. The recent price cut by Saudi Arabia could lead to higher buying volumes in China, which often imports larger quantities when prices are lower.
In August, China imported the highest volume of crude oil in a year, driven by lower international prices. This trend of increased commodity imports at reduced prices could explain the rise in volumes despite slower-than-expected Chinese economic growth.
The lower international oil prices may have significantly influenced China’s oil purchases in August, reflecting the country’s strategy to capitalize on lower costs.