China’s crude oil imports in January were significantly higher than a year ago (+1.6 myn b/d y/y).
The main loser of that growth in crude oil demand was Saudi Arabia and the main gainer was the US. As Saudi Arabia limits its crude oil exports to support prices, the higher prices have resulted in a surge of US crude oil production which combined with improving export infrastructure in the US, leads to the US taking a significant market share in China, which should have been the prime market for Saudi Arabia. China reports 474 kb/d of crude oil imports from the US in January, and the risk is to see that number increase further now that the US is able to load VLCCs directly from its LOOP offshore port.
Saudi’s main rivals in the gulf area are also benefiting from the Saudi limited export scheme. China’s import of crude oil from Iran is reported +347 kb/d higher than a year ago and Iraq was higher by +224 kb/d y/y. Russia is also enjoying the collaboration with Saudi Arabia as it sees its export to China +254 kb/d higher than a year ago. At 1.3 myn b/d, Russia has become the main source of crude oil for China and the gap with Saudi Arabia is increasing. In January, even Iraq exported more crude oil to China than Saudi Arabia. Iraq is also by far the main import origin deliverable to the upcoming Shanghai crude oil futures contract.