Singapore:Saudi Arabia's crude oil supply to China is expected to decline in February compared to January, according to trade sources, following the Kingdom's price hike and the extension of production cuts by OPEC+ for the first quarter of 2025.
State-owned oil firm Saudi Aramco is set to ship around 43.5 million barrels to China in February, down from 46 million barrels in January, which marked a three-month high in exports. The decrease is attributed to reduced allocations to Chinese refiners, including state-owned giants CNOOC and PetroChina, as well as the private refiner Hengli Petrochemical. However, Saudi Aramco is expected to increase its supply to Sinopec and Sinochem.
Aramco declined to comment on its February allocations to China.
OPEC+, which controls about half of the world's oil supply, made the decision in early December to delay the start of oil output increases by three months until April and extend the full unwinding of production cuts by an additional year, now set to conclude in December 2026. This decision was made due to weak global demand and rising production outside of the group.
As supply tightens, Aramco has raised its official selling prices to Asia for the first time in three months. Earlier this week, it increased the official selling price (OSP) for its flagship Arab Light crude by 60 cents to $1.50 per barrel above the Oman/Dubai benchmark average, slightly exceeding market expectations.
In response to tighter supply, Asian refineries, particularly in China and India, are seeking to purchase more Middle Eastern crude grades. This shift comes as sanctions from Western countries have reduced available supplies and driven up the prices of Russian and Iranian oil.
Saudi Arabia remains the second-largest crude oil supplier to China, after Russia. According to Chinese customs data from December, China's crude imports from Saudi Arabia reached 72.27 million tons (1.44 million barrels per day) in the first 11 months of 2024, a decrease of 9.6 per cent from the same period a year earlier.__Reuters
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