Crude shipment to China doubled and to US dropped 62% since August 2018; Iran sanctions have helped the dramatic shift
DESPARDES — Saudi Arabia’s crude shipments to China have doubled in the span of a year. During the same period, its oil exports to the U.S. have dropped by nearly two-thirds.
Industry experts say the numbers signal a mix of short-term tactics and long-term strategy for the Saudis, reported CNBC.
How dramatic is the change? Take a look at this graph, which uses data from oil tanker tracking firm TankerTrackers.com.
U.S. sanctions on Iranian oil have helped the shift. Major Asian energy importers like China have been forced to shift business away from Iran— OPEC’s third-largest producer — and start buying more Saudi barrels to make up for that shortfall.
The U.S. is now more self-reliant than ever, thanks to its own shale oil revolution, which helped it become the world’s largest oil producer by the end of last year.
Since China has the ability to “easily absorb oil barrels from the market, especially when prices dip,” many analysts see a clear strategy from Beijing.
In the current low oil price climate, the world’s largest oil importer is happy to up its Saudi crude purchases as its appetite increases, particularly given its launch of two new refineries.
“Whether for precautionary reasons (due to Iran sanctions), out of price opportunism, or in preparation for new refining capacity coming online — or all of the above,” data shows a dramatic run-up in Chinese crude imports and crude inventories. This is “thanks in part, once again, to the availability of Saudi barrels,” said TankerTrackers.com co-founder Samir Madani who describes China as a sort of “black hole” for the world’s oil exports.
As for Saudi Arabia, locking in Asian market share is one of its key long-term goals. Saudi Aramco’s plan to acquire a 20% stake in Indian refining and petrochemicals giant Reliance is the most recent example of this.
The original article appeared in CNBC News.