Saudi Arabia to Ship Lower Crude Oil Volumes to China Despite OPEC+ Output Increase

Despite the expected rise in OPEC+ production in April, Saudi Arabia is set to reduce its crude oil shipments to China significantly next month, marking the lowest volumes seen in over a year. According to Reuters, trade and industry sources indicate that this decrease is mainly due to spring maintenance at several large state-controlled refineries in China, the world’s largest crude oil importer.

In April, Saudi Arabia will ship approximately 34 million barrels to China, down from 41 million barrels in March. This significant drop is largely attributed to the planned shutdowns at China Petroleum and Chemical Corporation (Sinopec) refineries, which are expected to affect crude processing capacities by about 700,000 barrels per day (bpd). These temporary closures are scheduled to take place from mid-March through the end of May, according to data gathered by Reuters.

The decline in Saudi shipments comes at a time when China is also seeing a rebound in imports of cheaper crude from Russia and Iran. Following the initial impact of U.S. sanctions on these two countries, a massive reshuffling of tankers has enabled non-sanctioned vessels to pick up the slack in trade with Russian and Iranian oil. This shift has led to an increase in China's imports of these lower-cost crudes, which are expected to rise in March after hitting a two-year low in February.

The sanctions on Russia and tightening measures against Iran’s shadow fleet have resulted in higher daily rates for non-sanctioned tankers, as operators rush to capitalize on profitable trades. In some cases, these rates have doubled or even tripled in the past month, encouraging more non-sanctioned vessels to enter the market with Russian and Iranian oil.