MOSCOW: Russia overtook Saudi Arabia as China’s largest crude oil supplier for the third time this year in November, customs data showed as Russia captures fresh demand from new Chinese crude buyers.
The jump in imports demonstrates the battle occurring between Russia and Saudi Arabia for market share in China, the second-biggest crude consumer in the world. A global oil supply glut has raised the stakes for producers who are eager to sell barrels at the expense of their competitors.
China brought in about 949,925 barrels per day (bpd) of Russian crude oil in November, compared with 886,950 bpd from Saudi Arabia, data from the General Customs Administration showed.
Through the first 11 months of the year, Saudi Arabia remained the No. 1 seller with total supplies at 46.08 million tons, or around 1.01 million bpd, up 2.1 percent over the year-ago period.
Russia, which ramped up exports by 28 percent over the same period, supplied 37.62 million tons, or about 822,200 bpd.
Starting in July, China has allowed more than a dozen mostly independent companies to import crude oil, pushing its crude oil purchases to new highs at the same time Beijing has also stepped up its strategic stockpiling.
The bulk of Russia’s crude exports are of ESPO Blend from the Pacific port of Kozmino. China bought more than two thirds of ESPO supplies in November and December this year, up from about 40 percent a year ago, data from Thomson Reuters’ Oil Research & Forecasts showed.
ESPO crude arrivals at Qingdao, Yingkou, and Rizhao ports, where independent refineries are located, rose during the period, the data showed. Additionally, major state refiners Sinopec, PetroChina and ChemChina regularly import the Russian grade.
With a rigid allocation system and destination restrictions on contracts, Saudi crude is less appealing to China’s new crude importers when compared with Russian grades, traders have said.
Cheaper freight costs for Russian crude versus suppliers from outside the Asia-Pacific region were also helping Russia boost its exports to China, traders said.
Saudi Arabia has extended annual crude oil contracts with China for 2016 at almost unchanged volumes for a third year, as buyers bet on abundant global supplies and low prices to widen their purchase options, sources said earlier this month.
