Saudi Arabia's supply of crude oil to China is set to fall to approximately 36.5 million barrels in December, marking the second consecutive month of decline and the lowest monthly export volume since July, according to trade sources. The dip reflects the current state of weakened demand in China, the world’s largest crude importer.
In November, China is expected to receive around 37.5 million barrels, a reduction from about 46 million barrels in October, based on trade data compiled by Reuters. Major Chinese state-owned oil companies, including Sinopec, PetroChina, and Sinochem, are projected to scale back their imports in December due to declining demand and low refining margins.
Meanwhile, Saudi Arabia’s supply to its joint venture Fujian refinery in China is anticipated to rise again as the facility wraps up maintenance and resumes normal operations. This exception aside, the general reduction in demand has prompted Saudi Aramco, the Kingdom’s state oil giant, to reduce its official selling prices for all grades of crude oil sold to Asian markets in December.
China’s refinery output has slowed in recent months as refining margins have compressed and domestic fuel consumption, especially for road transportation, has softened. The latest downturn in Chinese demand coincides with a year-on-year drop in Saudi crude shipments to China, with exports declining by 10.8% to 59.52 million metric tons, or about 1.58 million barrels per day, in the first nine months of 2023, as indicated by Chinese customs data.
Although demand from China is slowing, Saudi Arabia will maintain full crude allocations for other North Asian refiners in December, underscoring the varying demand patterns within the region.
