Saudi is cutting down its oil supplies to China, in what is a fresh reallocation of its crude supplies to customers worldwide amid the shifting distribution of Russian oil.
According to anonymous sources with knowledge of the matter who were cited by Bloomberg and Reuters news agency yesterday, Saudi Aramco – the world’s largest oil exporter – had notified at least four Chinese refiners that it will supply less than the contracted volumes of oil in the next few months.
The reason for the decrease in supplies to the Chinese refineries is reportedly due to China’s purchase and importing of Russian oil at a significant discount, as the Russian supply is being refused and cancelled by Western states over Moscow’s ongoing invasion of Ukraine.
As Saudi supplies to Chinese refiners are being cut, sales of the kingdom’s oil are being increased to Malaysia, while at the same time being maintained in full to Japan, South Korea, Thailand, India, and three European refiners.
The altering of Saudi Aramco’s oil supplies and global distribution comes after the company shocked the market by raising its official July price for Arab light crude oil by $2.10 per barrel from this month’s level for Asia, resulting in the hiking of global oil prices to over $120 per barrel.
Aside from the war in Ukraine and the West’s shunning of Russian oil exports, the huge price hike is also a result of the Organisation of the Petroleum Exporting Countries’ (OPEC+) decision to stick to only modest rises in oil production and that it is not possible to fill in the void left by the lack of Russian oil supplies to the European Union (EU).