Page 9 - AsianOil Week 12 2022

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Saudi Arabia once again

China’s top oil supplier

PERFORMANCE IN a not altogether unexpected turn of events no reliable data on this have yet been released.
given the ongoing Russia-Ukraine war and its Meanwhile, Beijing had been prepared to
impact on global oil markets, Saudi Arabia has upset Washington late in 2021 by importing
again replaced Russia as China’s top crude oil Iranian crude. Figures were released at the time
supplier. showing that almost 260,000 tonnes of Iranian
In figures released by China’s General crude had been ordered.
Administration of Customs (GAC), Saudi This oil arrived in Chinese ports in January,
exporters were shown to have regained their marking the first shipment in over a year from a
previously held top spot in the country’s country long targeted by US sanctions.
supply rankings. This came after increased In related news, some sources have now
Russian exports towards the end of last year revealed that Saudi talks with Beijing to start
saw Russia briefly unseat Saudi Arabia in accepting payments for crude in Chinese yuan
December. rather than in US dollars have been ongoing for
Recent cuts in Chinese import quotas, borne some time.
primarily by independent refineries, as well as Behind the willingness to move away from
sanctions against Russia, have led to Russian oil sales of oil in dollars – a norm since 1974 – is
exports to China falling to 12.67mn tonnes dur- increased ill-feeling over US security commit- Currently roughly
ing January-February 2022. This is equivalent to ments in Saudi Arabia.
1.57mn barrels per day, down 9% year on year. If eventually realised, the effects on both the 25% of all crude
Over the same period year in 2021, that figure US and China would be significant, and could
stood at 1.72mn bpd. encourage other major economies including sales from Saudi
Yet in spite of the decrease in total tonnage, Japan and leading European Union countries to
the overall cost of Russian crude in the same time attempt similar moves. make their way to
frame increased by almost a third, up 31.4% to Currently roughly 25% of all crude sales from China.
$7.46bn. Saudi make their way to China, and with this
Hardest hit was Russia’s ESPO crude, largely comes significant leveraging power on the part
as a result of China’s teapot refineries facing pres- of Beijing.
sure from government authorities responding to But whilst negotiations have been going on
claims of tax evasion by smaller operators from since the late 2010s between Riyadh and Beijing,
late last year. with around 80% of all crude oil transactions
Saudi numbers meanwhile came in at a little around the world using US dollars, analysts do
over 14.6mn tonnes, or 1.86mn bpd, imported not see any immediate danger to the status quo.
by China at a total cost of $ 8.74bn. Indeed, it is worth noting that the Saudi riyal is
China does not look ready to completely itself pegged to the dollar.
abandon Russia yet, though. At stake for all concerned, however, is roughly
Reports in recent weeks have claimed that $14 trillion in annual global oil trade – a trade in
buyers in China are already working with Rus- which China is the world’s leading importer –
sian oil producer Surgutneftegaz to keep supplies with a government keen to make hay while all
flowing around Western-led sanctions, although eyes are on events in Ukraine.™

Week 12 25•March•2022 www. NEWSBASE .com P9