‘It is a neck-and-neck race’

Russia is competing with Saudi Arabia to become China’s top crude supplier in 2020

Despite a worldwide industrial slowdown, China keeps boosting oil purchases this year making the most of low prices. In 2019, Saudi Arabia outperformed Russia as China’s largest oil supplier, but now Russia has every chance to win the leadership back.

Saudi Arabia and Russia are in a tight race to become China’s top oil supplier in 2020, reports Reuters. According to analytics firms Refinitiv, Vortexa and Kpler, Saudis have exported between 1,6 million and 1,7 million bpd of crude in January-November 2020, while Russia has supplied about 1,7 million bpd to China so far in 2020. “It looks like Russia has displaced Saudi Arabia to clinch the top spot this year,” commented Serena Huang, an analyst at Vortexa. “It is a neck-and-neck race,” she added. The two countries are followed by Iraq with about 1,2 million bpd.

The three analytics companies expect the volume of Saudi crude arriving in China in November to exceed May’s record and be twice as high as in October. Trade sources explain the increase by the fact that state oil giant Saudi Aramco sharply cut crude prices for Asian customers in October. According to Refinitiv, the bulk of this incremental crude is entering China via ports of Quanzhou, Zhanjiang, Zhoushan and Ningbo.

“Congestion of Chinese ports is starting to increase again, so there may well be some additional slippage into December, but the overall picture will remain the same,” said Kpler’s analyst Alexander Booth. As for Russia, Vortexa expects the country to export 1,49 million bpd of crude to China in November, compared to 1,55 million bpd in October.

The global oil industry has faced significant challenges this year due to sluggish business activity and a virtual halt in the travel industry. China is one of the few countries expected to increase crude purchases in 2020, as its fuel demand recovered from the second quarter along with the broader economy. All three China’s top suppliers have increased daily exports this year, but Iraq has shown the biggest rise in oil exports to the People’s Republic so far in 2020, partially thanks to deliveries into commercial storage tanks held by the Shanghai International Energy Exchange. Reuters’ calculations based on Vortexa data show that Iraq’s crude exports to China have grown by nearly 190,000 bpd in January-November compared to full-year volumes of 2019.

By Anna Litvina