Saudi oil sales to China will halve as Hormuz crisis lifts prices
The cut follows the vital strait’s closure and upending of energy flows due to the Iran war
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[RIYADH] Saudi Arabia’s crude sales to its top importer, China, are set to halve in May, as the war in the Middle East upends flows and lifts prices, said traders familiar with the matter.
The world’s biggest exporter is set to ship around 20 million barrels of oil to its customers in China that month, they said, asking not to be identified as they were not authorised to speak publicly.
That is down from roughly 40 million barrels allocated for loading in April.
Saudi Aramco, the national oil company of Saudi Arabia, declined to comment.
The cut in sales comes after it raised official selling prices of its crude to a record high, as the Iran war resulted in the effective closure of the Strait of Hormuz and upended energy flows.
Saudi Arabia has an outlet for its oil at the country’s Yanbu port in the Red Sea, but it is not able to funnel all of the supplies that used to go through the Persian Gulf using that link.
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The war in the Middle East, now in its second month, shows no signs of easing, after talks between the US and Iran in Pakistan failed to yield an agreement over the weekend.
In an escalation, US President Donald Trump threatened to blockade the Strait of Hormuz, preventing all maritime traffic from entering and exiting Iranian ports from Monday (Apr 13) at 10 am Eastern Time in the US (10 pm, Singapore time).
Yanbu has an export capacity of around five million barrels a day, less than the 7.2 million barrels a day the Saudis shipped before the war, mainly from facilities within the Persian Gulf.
Asian refiners were offered only Arab Light grade crude via the Red Sea port, traders said.
The prices of Dubai and Oman – two benchmark crudes used to set Saudi Arabian oil – have become increasingly erratic, as the war created a shortage of the barrels used to assess them. BLOOMBERG
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