RIYADH: In increasing its oil exports to China, Saudi Arabia has fired a “shot across Iran’s bow,” industry analysts say. Saudi shipments of oil to China rose by 36 percent in February to the highest level in at least three years, according to ClipperData, a firm that tracks global crude shipments.
Analysts seized on the timing of Saudi’s move, coming after the kingdom called for a global “freeze” on oil output at January levels and as Iran significantly increases production after the lifting of international sanctions. Iran said the Saudi freeze plan was a “joke” and it will continue with its plan to increase production. China is Iran’s number one crude oil customer.
The increased Saudi shipments to China are “a political shot across the bow of Iran,” said Matthew Smith, ClipperData’s director of commodity research. “The timing of it seems extremely interesting. It looks like there’s something underway there.” Analysts also say Iran’s influx of cash from the sale of oil will enable it to further fund ongoing regional proxy battles against the Saudis in Syria, Yemen and elsewhere.
“It’s a broader attempt by the Saudis to thwart the resurgent influence of Iran,” said Vincent Piazza, an energy analyst at Bloomberg Intelligence. Saudi Aramco, Saudi Arabia’s state-owned oil company, warned in January that it won’t withdraw production just “to make space for others.”
“Saudis’ actions speak louder than their words,” Smith said. “They may be willing to entertain a production freeze if everyone plays ball, but in the meantime they are continuing to flood the market.”
