March 21, 2024 [Market Screener]- Russia remained China’s main oil supplier in the first two months of the year, according to data released on Wednesday, as Saudi supply cuts continue. Chinese imports from Russia (pipelines and sea shipments), rose by 13% on the year to 17.72 million tonnes, or 2.16 million barrels per day (bpd) in the January-February period, according to data from the General Administration of Customs.
Russia was China’s main supplier throughout 2023, shipping over 107 million tonnes, or 2.14 million barrels per day, despite Western sanctions and price caps following the Kremlin’s invasion of Ukraine in 2022.
In coordination with other OPEC+ members, Russia has chosen to bring forward a voluntary crude oil production cut of 300,000 bpd in the first quarter of the year, with the aim of supporting energy prices. The country will reduce its oil production and exports by a further 471,000 bpd in the second quarter.
Little disruption in the north
The flow of Russian crude from the Baltic and the Arctic was hardly disrupted by attacks by Houthi rebels in the Red Sea, while ESPO (Eastern Siberia Pipeline) shipments attracted increased interest from refiners.t from independent refiners due to higher prices for alternative feedstocks, said commodity consultancy Vortexa ahead of the data release.
Shunned by many international buyers, Russian crude oil traded at prices well below international benchmarks for most of last year. This discount has gradually eroded with the arrival of new refiners on the market, with ESPO loaded in February being offered at between -0.50 dollars and +0.50 dollars against ICE Brent, compared with a discount of 6 to 8 USD a year earlier, according to trade sources.
Saudi Arabia, Iraq, Malaysia
Imports from Saudi Arabia, previously China’s largest supplier, totaled 13.49 million tonnes, or 1.64 million bpd, down 3% on the same period in 2023. Riyadh said it would extend its voluntary cut of 1 million bpd until the end of June, leaving production at around 9 million bpd. Saudi Arabia cut its official selling prices to Asia for its flagship product, Arabian light crude, to their lowest level for 27 months in February, due to concerns about oversupply and competition from rival suppliers. Iraq came third (10.14 million tonnes, +5.4%), ahead of Malaysia, a transshipment point for sanctioned cargoes from Iran and Venezuela. Volumes there climbed by 69% over the year to 8.93 million tonnes, or 1.09 million bpd.
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