China’s Oil Imports From Saudi Arabia Fell 13% YoY in November

Higher Saudi prices for January delivery, lower overall demand for crude amid the Omicron uncertainty, the Chinese crackdown on illicit practices at its independent refiners, and refinery maintenance season starting in late Q1 2022 have resulted in Asian refiners abstaining from extra Saudi crude supply for loading in January.

Refiners in the world’s largest oil-importing region have not asked for additional supply from the world’s largest oil exporter, Saudi Arabia, above the term supplies under the long term contracts.

Earlier this month, however, Saudi Arabia raised its official selling price for its flagship Arab Light crude to a nearly two-year high premium over the Oman/Dubai benchmark, signaling confidence in Asian demand despite the still high uncertainty about the Omicron variant of COVID.

Arab Light will next month sell for USD 0.60 more per barrel than it does this month for buyers in Asia. That’s USD 3.30 a barrel more than the Oman/Dubai benchmark, off which Middle Eastern crude going to Asia is priced.

The premium over Oman/Dubai is the highest for Arab Light since early 2020—the months before the pandemic struck.

Apart from the higher Saudi prices, Asian refiners are not rushing to buy crude above the volumes in their term supply deals, due to low refining margins for fuels after the peak winter demand in March, when cargoes loading in January are set to arrive in Asia.

In addition, China’s independent refiners, common

China’s imports of crude oil from Saudi Arabia in November decreased by 13% from a year ago, but the kingdom retained its lead as a supplier to the world’s largest oil importer.

Data from the General Administration of Customs in China showed on Monday, December 20 that Saudi oil flows to China amounted to 7.4 million tons last month, which is equivalent to 1.8 million barrels per day.

This is compared to 1.67 million barrels per day in October and 2.06 million barrels per day in November of last year.

The increase in imports on a monthly basis is in line with the decision of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, within the framework of the OPEC + group, in July to increase production by 400,000 barrels per day each month until at least April 2022.

And China’s imports in November from Russia, its second-largest supplier of crude oil, remained at about the same level a month ago at 6.7 million tons, or 1.63 million barrels per day.

Crude oil imports from Brazil and Angola fell 28% and 18% respectively compared to the same period a year ago, although sellers from West Africa and the Americas are seeking larger shares in the Asian market.