(April 13): Saudi Arabia’s crude sales to top importer China are set to halve next month as the war in the Middle East upends flows and lifts prices, according to 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 for May, the traders said, asking not to be identified as they are not authorised to speak publicly. That’s down from roughly 40 million barrels allocated for loading in April.
Saudi Aramco declined to comment.
The cut in sales comes after Aramco raised the official selling prices of its crude to a record, 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’s not able to funnel all of the supplies that used to go through the Persian Gulf using that link.
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 10am Washington time on Monday.
See also: Oil may rise to US$150 if US goes ahead with blockade, Onyx says
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 only offered 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 prices — have become increasingly erratic as the war has created a shortage of the barrels used to assess them.
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