Russia passes Saudi Arabia as top China crude supplier

Market: Crude oil
27/05/20

China's crude imports from Russia rose in April but deliveries from Saudi Arabia and Brazil fell sharply, detailed customs data show.

Imports of Russian crude hit 1.75mn b/d last month, up by 6.1pc from March and by 17.7pc from April last year.

Russian exporters shipped more sour Urals crude to China while keeping exports of other key grades steady. Offers for Urals were competitive with other sour grades in April as Riyadh and Moscow launched fierce price competition, generating a rise in buying interest.

China was the main destination for Urals in the first quarter, taking just over 4mn t or around 320,000 b/d. And exports of Urals are likely to rise further in May, with seaborne loadings of the grade from Baltic and Black Sea ports estimated at 2.13mn b/d in April, up by 371,500 b/d compared with the average for January-March. More than 700,000 b/d of Urals left Baltic Sea ports for Asia-Pacific in the first half of April, with almost all heading to China on 80,000-120,000t Aframax vessels.

Russia became the single-largest exporter to China in April, thanks to the rise in its shipments and a fall in deliveries from Saudi Arabia.

China took just 1.26mn b/d of Saudi crude last month, down by 26pc from March to an 11-month low. But deliveries are likely to rebound in May and June, with Saudi Arabia's total crude exports surging by 1.66mn b/d to 9.27mn b/d in April as Riyadh seized market share after the expiry of the Opec+ output restraint deal.

Asia-Pacific absorbed the majority of the increase, with eastbound Saudi shipments rising by 1.24mn b/d to a record 6.12mn b/d, supported by stronger Chinese demand.

China's crude imports from Brazil dropped below 600,000 b/d last month for the first time this year. China took delivery of 545,000 b/d of Brazilian crude in April, down by 28.6pc from March and by 36.3pc from April 2019, and well below average imports in January-March of 874,000 b/d.

China's imports from Iraq also fell in April, dropping by 26.3pc to 971,000 b/d from March's 1.32mn b/d. Deliveries from Iran more than doubled from a month earlier to 126,000 b/d in April, although this was lower by 84pc from a record high year earlier.

Imports from Malaysia were 384,000 b/d in April, up by 55pc from March and more than triple levels in April 2019. China's imports from Malaysia have risen strongly over the past year, despite no comparable increase in Malaysian output, suggesting blenders in the country are disguising the origins of crude from sanctions-hit suppliers such as Venezuela before shipping the cargoes on to China.

Imports from Venezuela were zero again in April for the seventh straight month, the customs figures show. China also took delivery of no US crude in April.

Angolan exports to China were 828,000 b/d, declines of 11.8pc from March and 23.8pc from April last year, as Chinese refiners instead opted for similarly priced Brazilian Lula crude over the west African Djeno grade.

China's total crude imports were 9.84mn b/d in April, up by 1.7pc from March but down by 7.5pc from April 2019, the customs data show. Imports fell from 10.47mn b/d in the first two months of this year, as the impact of the Covid-19 outbreak led to a decline in buying from the end of January and throughout February that hit deliveries in March and April.

Demand started to rebound in late March as China brought the outbreak under control, domestic oil product demand started to rise and crude prices fell. This is likely to support May imports, which Argus expects to rise back above 10mn b/d.

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21/11/24

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21/11/24

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