Saudi Arabia Heeds Chinese Request for More Oil
The world’s biggest oil exporter seems willing for now to satisfy Chinese requests for extra crude as supplies are squeezed elsewhere.
At least one Chinese customer got additional oil from Saudi Arabian Oil Co. for loading in July on top of its normal contractual volumes, according to people with knowledge of the matter. The extra supply was at the request of the customer, the people said, asking not to be identified because the matter is private. At least five other Chinese buyers got what they requested, though it’s not clear if they asked for extra crude.
Aramco declined to comment on the matter in an emailed response.
Saudi Arabia is juggling its commitment to restrict oil production as part of the OPEC+ pact to shore up prices with its pledge to make up a shortfall in supply, if requested by its customers, after U.S. sanctions waivers against Iran were discontinued.
The request for additional July supplies signals that China may be starting to feel the pinch from the lost Iranian barrels as well as curtailments from other producers including Venezuela. China, the world’s biggest oil importer, is also buying less oil from the U.S. because of the worsening trade war between Washington and Beijing.
In Europe, five refineries representing a significant proportion of the continent’s buying are getting their full Saudi Arabian allocations for July as normal, according to traders familiar with the matter. One of them asked for more but the request was declined.
Global benchmark Brent crude has fallen around 19% from a high in late April in spite of the supply losses, as the trade dispute erodes confidence in the global economy. That will ratchet up pressure on the Organization for Petroleum Exporting Countries and its allies to at the very least extend their output curbs at their upcoming meeting in Vienna.
Saudi Aramco fulfilled the contractual volumes nominated by three customers in other North Asian countries, while reducing supplies of lighter varieties to one other buyer in the region, according to people with knowledge of the matter.