Saudi Arabia To Reduce Crude Oil Exports To China In September

SEATTLE (Oil Monster): Saudi Arabia is expected to ship lower volumes of crude oil to the world's top importer, China, next month, as official Saudi term prices were raised for September.

The Kingdom, the world's largest exporter of crude oil, is set to export 43 million barrels of crude to China in September, down by about 3 million barrels from August's estimated 46 million barrels of shipments, Reuters reported on Monday, quoting trade sources with knowledge of next month's term supply allocations to Chinese buyers.
The allocations for September supply come after Saudi Arabia last week raised the official selling price (OSP) of its flagship Arab Light crude grade for Asia for the first time in three months.

With the hike, Arab Light will cost $2 per barrel over the Oman/Dubai average next month for Asian buyers, although the increase of $0.20 per barrel over the Oman-Dubai benchmark was smaller than the amount analysts expected.
Refiners in Asia had expected a hike of between $0.50 and $0.80 per barrel for September compared to August prices, to a premium of between $2.30 and $2.60 per barrel over the Oman/Dubai average.
However, refining margins are weak in Asia and could limit the potential of a Saudi price hike for September, some of the respondents in a Reuters survey said.
The increase in the price of Arab Light was much smaller, and this may have to do with the sluggish demand for gasoline and diesel in China amid lower-than-expected GDP growth and the still unresolved crisis in the property sector.
Although the Saudi price increase for September was lower than expected, the cost of supply of Saudi crude under term agreements – the ones the Kingdom prefers for its oil – would still be higher than the prices of other crude grades from the Middle East that are being traded on the spot market, buyers have told Reuters.

Courtesy: www.reuters.com