SEATTLE (Oil Monster): Saudi Arabia's crude oil exports to China are expected to remain at record-low levels in July, reflecting weak demand from the world's largest crude importer as elevated oil prices continue to squeeze refiners’ margins. According to market sources, Saudi Aramco will supply approximately 12 million barrels of crude to Chinese customers for July loading.
The reduced allocations highlight Chinese refiners' reluctance to purchase expensive crude following the surge in oil prices triggered by the U.S.-Israeli conflict with Iran. It must be noted that many refiners have scaled back processing rates and are seen relying more heavily on existing inventories.
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Sinopec, the largest Chinese refiner, reportedly did not purchase any Saudi crude for the second consecutive month. Also, purchases by major private refiner Rongsheng Petrochemical were significantly lower than pre-conflict levels.
Although Saudi Aramco lowered its July official selling prices to Asian buyers by $6 per barrel compared to the previous month, prices still remain well above pre-war levels. This has forced Chinese refiners to look for lower-cost alternatives, including Russian crude and grades sourced from West Africa and Latin America.
The logistics challenges following Iran's closure of the Strait of Hormuz are also likely to limit Saudi crude supplies to China.
