Saudi Arabia is set to increase its crude oil shipments to China in January, reaching the highest level in three months. The country, the world’s top oil exporter, recently reduced prices for oil shipments to Asia, according to trade sources speaking with Reuters.
In January, Saudi Arabia plans to send 46 million barrels of crude to China, the largest volume since October. This marks a significant rise compared to the 36.5 million barrels expected to be shipped in December. The December shipments will be the second consecutive month of lower deliveries from Saudi Arabia to China.
Major Chinese refineries, including state-owned Sinopec and PetroChina, as well as private companies Rongsheng Petrochemical and Shenghong Petrochemical, are expected to increase their purchases of Saudi crude in January, sources told Reuters.
The rise in demand for Saudi oil follows two months of price cuts by the Kingdom, as signs of weaker demand in Asia and falling Middle Eastern oil benchmarks have boosted Chinese refiners’ interest. Additionally, higher prices for Iranian oil and uncertainty around future supplies from Iran have also contributed to increased demand for Saudi crude.
This week, Saudi Arabia lowered its official selling price (OSP) for crude oil to Asia for January. The price cut was widely anticipated due to weak global prices. Aramco, Saudi Arabia’s state-owned oil company, reduced the price of its flagship Arab Light crude by $0.80 per barrel, from a $1.70 premium over the Oman/Dubai average in December to a $0.90 premium for January. Analysts had predicted a price reduction of between $0.70 and $0.90 per barrel.
The price adjustment comes as demand from Asia, Saudi Arabia’s largest export market, has been weaker than expected, making the price cut a likely move.
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