Saudi Arabia Vs. Russia: Who will become China’s top oil supplier in 2020?

By Rahul Vaimal, Associate Editor
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Even as the coronavirus pandemic hit global oil demand this year, Saudi Arabia and Russia are in a close battle to become China’s top oil supplier in 2020 with both countries boosting crude exports to the economic powerhouse.

Saudi Arabia, which last year was China’s biggest supplier, exported between 1.6 million and 1.7 million barrels per day (bpd) of crude from January to November 2020, as deep price cuts gave Saudi oil exports a boost this month, according to experts.

The country has been catching up with Russia, which has exported around 1.7 million bpd of oil to China so far in 2020, while Iraq is in third place with about 1.2 million bpd.

This year the oil industry was hard hit as the coronavirus pandemic hurt business activity and caused a virtual halt to the travel industry.

One of the few countries to have improved purchases in 2020 is China, the world’s biggest crude importer, as buyers made the most of low prices earlier this year while fuel demand, along with the wider economy, recovered from the second quarter.

“It looks like Russia has displaced Saudi Arabia to clinch the top spot this year. It is a neck-and-neck race and it remains to be seen as to who will be the ultimate winner,” said analysts.

It is expected that the volume of Saudi crude heading to China in November will reach between 2.13 and 2.24 million barrels per day, compared to a record high of 2.1 million to 2.14 million bpd in May, according to estimates from the three companies. That would be almost double their October volume estimates.

The increase comes as Saudi Aramco, the state oil giant, cut crude prices sharply for Asian customers in October, trade sources said. It takes about a month to ship cargo.
By comparison, it is anticipated that 1.49 million bpd of Russian crude will reach China this month down from 1.55 million bpd in October.

In November, the bulk of the incremental crude flowing from Saudi Arabia, the world’s leading oil exporter, to China will enter the cities of Quanzhou, Zhanjiang, Zhoushan and Ningbo through ports.

“Congestion is starting to increase again off Chinese ports, so there may well be some additional slippage into December but the overall picture will remain the same,” said experts.

Although all of China’s top three suppliers have raised daily exports this year, Iraq saw the largest rise in oil exports to China so far in 2020, driven in part by the Shanghai International Energy Exchange’s deliveries to commercial storage tanks.

According to data, Iraq’s crude exports to China grew by nearly 190,000 bpd in the first 11 months of this year versus full-year volumes in 2019.