China Forced to Accept Higher Saudi Prices

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Another power struggle may be playing out in the Mideast crude market between the world's largest crude importer, China, and its largest exporter, Saudi Arabia. For a third consecutive month, Saudi Aramco announced official formula prices for its exports of medium and heavy, sour crudes to Asia that were higher than expected. Chinese term lifters, among some of Aramco’s biggest buyers, are miffed. Even last month, Saudi formula prices were already “too high,” a Chinese term lifter emphasized. Unipec, the trading arm of China’s largest refiner Sinopec and a crucial player in global oil markets, felt that same way, he added. This month, Aramco slashed February Asian formula prices by its medium and heavy sours by just $1 per barrel to $1.10/bbl from the previous month. Many traders had expected much deeper cuts ranging from $1.30/bbl to $2.00/bbl. Two sources at Chinese term lifters criticized the cuts for not being deep enough.

Crude Oil, Oil Term Contracts, Oil Demand, Oil Supply, Independent Refiners
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