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China Lands Record-High Saudi Crude Imports

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China landed record-high volumes of Saudi crude in April as the world's biggest oil importer increased its dependence on the Middle East, even though its overall crude imports have plunged this year.

The spike in Saudi imports was probably attributable in part to official Saudi selling prices that were well received by the market.

China's April imports of Russian crude rose versus March, and most of that oil would have been bought before Moscow's Feb. 24 invasion of Ukraine.

Meanwhile, Chinese imports from Russia for the first four months of this year remain significantly below those for the same period of last year.

China's overall April crude imports of 10.51 million barrels per day were 415,000 b/d higher than in March but were slightly lower than its import for the first two months of this year.

Imports From Saudi Arabia Surge

Imports of Saudi crude spiked by 561,000 b/d from March to 2.18 million b/d in April, the highest level in Energy Intelligence records dating back to January 2007. They were also 602,000 b/d higher than in April of last year.

Saudi Aramco's official selling prices for Asia-bound crude exports loaded in March were announced in early February and were regarded as reasonable, or restrained.

This prompted Chinese term buyers to ask for higher volumes of Saudi crude, most of which would have arrived at Chinese ports in April.

Term buyers typically send in their requested volumes a day after the formula prices are released, and this would have been well before the Feb. 24 invasion of Ukraine.

Kuwait's official selling prices for March loadings mostly tracked those for comparable Saudi crudes.

That likely played a large role in China's crude imports from Kuwait leaping by 306,000 b/d from March to 887,000 b/d in April — their highest level in nine months.

Mideast Gains Market Share

While China's total crude imports have fallen well behind last year's levels so far this year, imports from the Mideast have surged, pushing the region's share of China's total imports considerably higher.

Total crude imports for the first four months of the year fell by 532,000 versus the same period of last year to 10.44 million b/d.

But total Mideast imports rose by 439,000 b/d to 5.63 million b/d, raising the Mideast's share of total imports by 6.6 percentage points to 54% for the fourth-month period.

Imports From Russia Rise

China's imports of Russian crude rose by 90,000 b/d from March to 1.6 million b/d in April. They were also 61,000 b/d higher than in April of last year.

Tankers sailing from Russia's European ports in the Baltic or Black Seas via the Cape of Good Hope take around 63 days to get to China.

That means any cargoes of Russia's Urals crude arriving in China in April would have loaded in February, with most of it purchased before Moscow sent its troops into Ukraine.

As for Russia's Espo crude, by the time the invasion started on Feb. 24, the spot Espo market was already trading cargoes loading later in April.

Espo takes less than a week to arrive in northeast China from the port of Kozmino in Russia's Far East. This means that much of the seaborne Espo that arrived in April would likely have been bought before the invasion.

Data analytics firm Vortexa tracked an average of 610,000 b/d of Espo crude arriving at Chinese ports in April while a Chinese trading analyst put the number at 695,000 b/d.

Those seaborne volumes would equate to 38% and 43% of China's overall imports of Russian crude in April. China also imports significant volumes of Espo by pipeline.

Russia's invasion of Ukraine does not appear to have dampened China's appetite for Espo.

Most of the spot Espo cargoes loading in May were believed to be heading to or have already arrived in China, according to two Chinese market players.

Vortexa tracked around 685,000 b/d of Espo crude arriving at Chinese ports in the first half of May.

Over the first four months of this year China has imported 1.56 million b/d of Russian crude, which was down 126,000 b/d from the same period of last year.

China's Major Crude Suppliers, April 2022
('000 b/d)Apr '22Mar '22Vol. Chg.Apr '21Vol. Chg.Jan-Apr '22
Saudi Arabia2,1821,6225611,5816021,857
Russia1,6011,510901,539611,564
Iraq9991,119-1201,086-871,151
Kuwait887581306656231758
UAE756761-5455302746
Oman7277270862-136915
Angola67966911763-84714
Brazil595484111684-89403
Kazakhstan2341379774160138
US18315528227-44200
Others1,6702,334-6641,934-2631,990
Total10,51410,0994159,86165310,438

Topics:
Crude Oil, Oil Demand, Oil Trade, Sanctions
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