The United States, increasing oil supplies to China, is forcing Saudi Arabia to look for other markets

The United States, increasing oil supplies to China, is forcing Saudi Arabia to look for other markets

The United States, increasing oil supplies to China, is forcing Saudi Arabia to look for other markets

The United States is rapidly increasing oil supplies to China, forcing Middle Eastern exporters to seek new markets or stockpile oil in their already overflowing storage facilities, writes The Wall Street Journal.

As of mid-September, the United States accounted for 7% of China's oil imports, up from 0.4% in January, according to research firm Vortexa Ltd. Meanwhile, Saudi Arabia's share fell from 19% to 15%.

Tanker traffic data show that US oil exports to China will reach 700,000 barrels per day (bpd) by the end of October, said Virginia Bakhnik, an analyst at Petro-Logistics SA in Geneva.

Earlier this year, China pledged to increase purchases of oil and other commodities as part of the first phase of its trade agreement with the United States. In accordance with this agreement, Beijing will have to purchase oil and liquefied natural gas (LNG) in the amount of $ 52.4 billion from the United States by the end of 2021.

China is still far from fulfilling the terms of this agreement, since in the first months of this year it was seriously behind the procurement schedule due to the coronavirus pandemic, experts say.

“China is having to catch up,” says Daniel Gerber, CEO of Petro-Logistics. This, he said, is changing traditional oil supply routes and putting pressure on prices.

Saudi Arabia is cutting oil prices for Asian buyers to make it more attractive to other states in the region. In addition, it is forced to send unsold oil to storage facilities, both domestically and abroad, including in Egypt, Singapore and China. According to analyst firm Kayrros, stocks in oil storage facilities in Saudi Arabia increased by 7% in the first two weeks of September to 81 million barrels.

Oil exports to China from GCC member countries fell by at least 400,000 bpd in September, to 1.6 million bpd, compared with the average level of the second quarter of this year, Petro- Logistics.

The upward trend in China's purchases of American oil may change if the US administration changes after the presidential elections in November of this year or if the current US President Donald Trump is re-elected for a second term, but changes his tactics towards China, experts say.

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