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Arabian Post
2 days ago
- Business
- Arabian Post
Saudi Oil Flow to China Inches Down Amid OPEC+ Expansion
Saudi Arabia will export about 47 million barrels of crude to China in July, marking a modest decline of one million barrels compared with June allocations. Despite the slight reduction, this remains the third consecutive month of elevated shipments to the world's largest crude importer, underscoring Riyadh's resurgence in securing market share. This shift follows a decision by OPEC+—a coalition of the Organisation of the Petroleum Exporting Countries and key allies—to increase collective oil production by 411,000 barrels per day in July, mirroring identical output hikes in May and June. Within this framework, Saudi Arabia has strategically adjusted its allocations across refiners within China's vast energy landscape. State-owned giants Sinopec and PetroChina, alongside the Aramco-Sinopec joint-venture Fujian refinery, are designated to receive greater volumes in July. Conversely, independent processors such as Rongsheng Petrochemical, Hengli Petrochemical, and Shenghong Petrochemical face reductions. This redistribution highlights a prioritisation of established, integrally linked buyers amid a backdrop of expanding OPEC+ supply. ADVERTISEMENT Although Aramco has yet to comment publicly, the company's allocation strategy aligns with broader pricing adjustments. Saudi Arabia recently reduced the official selling price of its Arab Light grade to Asia for July, setting it at $1.20 per barrel above the Oman/Dubai benchmark—20 cents less than June's pricing and the lowest benchmark since May. This pricing decision reflects two intertwined considerations: increased global supply and sustained domestic demand. Internally, Saudi Arabia ramps up crude consumption for power generation and refinery throughput during the summer months. This seasonal domestic demand can restrict exportable volumes, prompting a more conservative OSP reduction compared with the broader cutbacks anticipated by markets. Meanwhile, the continued output expansion under OPEC+ serves both competitive and geopolitical objectives, helping Riyadh reclaim influence in key markets. OPEC+ members have collectively unwound approximately 1.37 million bpd of previously implemented cuts since April, which form part of an initial 2.2 million bpd reduction plan initiated in early 2025. The restored output aims to counterbalance growing global non-OPEC production and mitigate domestic political pressure—particularly from the US, which has advocated for greater oil supply. Notably, seven other nations in the coalition also agreed to this third consecutive increase, reinforcing OPEC+'s strategic shift towards output recovery. Market analysts indicate that larger increases in crude availability have begun to weigh upon Middle Eastern benchmarks, with the June OSP developments 'less aggressive' than anticipated, partly due to Saudi Arabia's own intensified refinery runs. Global demand dynamics further complicate the outlook, with potential softening in Chinese economic indicators and US-China trade negotiations influencing futures pricing. This recalibrated export approach reflects a nuanced balancing act for Saudi Arabia: securing long-term contracts with major Chinese refiners while managing domestic consumption and contributing effectively to global supply strategies. Analysts point out that the kingdom has largely succeeded. Brent crude futures have remained stable around $65 per barrel, with occasional upward pressure following confirmation of July's OPEC+ increment. ADVERTISEMENT Within China, diversions in allocations have specific implications. State refiners, many with government backing and deeper logistical links to Aramco, stand to gain from increased shipments. Independent refiners, essential drivers of private-sector energy demand, are compelled to source a greater share of crude from alternative suppliers such as Russia, the Middle East, or emerging West African producers. Their reduced access to Saudi barrels may translate to thinner margins amid said competition. Chinese crude throughput data underscores this evolving dynamic. Earlier this year, the nation's refiners reached record-high processing levels—nearing 14.8 million barrels per day—yet faced maintenance schedules and weakening export margins for oil products. These factors have cooled demand from some processors, slightly alleviating pressure on upstream supply chains. Within OPEC+, calls for coherence and strict quota compliance persist. Saudi Arabia has publicly censured members like Kazakhstan for exceeding agreed production levels, underlining Riyadh's insistence on an equitable distribution of output responsibilities. Expectations remain that OPEC+ may complete the unwind of its 2.2 million bpd voluntary cuts by the end of September, though some analysts caution that internal discipline could falter, potentially reshaping future output and pricing trajectories. Against this backdrop, Saudi Arabia's adjusted supply to China illustrates both strategic recalibration and geographic realignment. By trimming shipments marginally from independents, bolstering allocations to state-linked refiners, recalibrating export prices, and synchronising with collective OPEC+ policies, the kingdom is reinforcing its position in a price-sensitive, competitive marketplace. July's allocations represent not a retreat but a fine-tuned manoeuvre in a complex global chessboard. Saudi Arabia is both maintaining influence and responding to evolving domestic and international demands. While Chinese imports continue at robust levels, the marginal dip signals a deliberate redistribution rather than a market-driven contraction.
International Business Times
24-05-2025
- Business
- International Business Times
Oil Prices Rise Slightly Ahead of US Holiday as Traders Eye Iran Talks and OPEC+ Output
Oil prices were slightly higher on Friday as American traders adjusted their positions before the long Memorial Day weekend, a time when demand for travel and fuel tends to pick up. Brent crude settled at $64.78 a barrel, 34 cents higher. West Texas Intermediate (WTI) also advanced, rising 33 cents to settle at $61.53. Much of the rise was related to short-covering ahead of the holiday. Analysts added that the beginning of the U.S. summer driving season usually lifts gasoline demand, offering firm support to oil prices at this stage of the year. Meanwhile, markets were closely monitoring the ongoing nuclear talks between the United States and Iran. Discussions in Rome ended without being able to seal a final agreement. The talks focus on restraining Iran's nuclear program in return for sanctions relief — that could end up eventually pushing up Iran's oil exports. But the situation has stayed murky with little progress made. The atmosphere is tense, and some officials have said if one hopes for diplomacy to fail, they would be open to considering military options. This takes us to the threat of potential Middle East supply disruptions, which serves as the latest risk to the oil market. Meanwhile, the organization of oil-producing nations, known as OPEC+—members of the Organization of the Petroleum Exporting Countries as well as allies like Russia — is to meet next week. We expect the group to announce an additional increase of 411,000 barrels per day for July. The prospective production increase is one step in a phased return to the cartel's cuts. OPEC+ has already added about one million barrels a day back to the market, starting in April. The group is targeting to unwind through to the end of October a 2.2 million bpd cut that the producers had made in voluntary output cuts, which was initially implemented to curb sliding prices amid economic downturns worldwide. OPEC+ raising production could further pressure prices lower if demand fails to keep up. Meanwhile, a breakdown in nuclear negotiations may cause a jump in geopolitical risks and potentially curb any future oil supply from Iran.
Time of India
05-05-2025
- Business
- Time of India
Global stock markets mixed as crude oil prices fall on OPEC+ supply boost
AI generated image Global share markets showed mixed results in light trading Monday, as oil prices dropped following the OPEC+ alliance's announcement to increase production. Several major markets, including those in Britain and much of Asia, were closed for holidays. US futures fell, with the S&P 500 down 0.6% and the Dow Jones Industrial Average off by 0.5%. In Europe, Germany's DAX added 0.4% to 23,181.61, while France's CAC 40 slipped 0.4% to 7,737.21. Oil prices dropped sharply. US benchmark crude lost as much as 4% early in the day, later recovering slightly to trade down $1.15, or 2%, at $57.14 per barrel. Brent crude , the global benchmark, dropped $1.14 to $60.15 per barrel. Over the weekend, OPEC+—a coalition of eight major oil-producing nations—announced it would boost output by 411,000 barrels per day starting June 1. The decision is attributed to 'strong fundamentals,' according to the group, though analysts speculate it may also be aimed at currying favour with US President Donald Trump ahead of his planned visit to the Middle East later this month. 'Washington wants cheap energy, and Gulf producers still lean on US security guarantees; the White House bears down, they listen,' said Stephen Innes of SPI Asset Management. 'In that sense the US president has become an unofficial swing vote inside OPEC+,' he added. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 35 & Earning? Protect Your Family with ₹1 Cr Life Cover ICICI Pru Life Insurance Plan Get Quote Undo Oil prices have declined nearly 20% over the past three months, reflecting growing concern about the global economic impact of Trump's trade policies. The US president has repeatedly cited lower gas prices as a political achievement. US crude is now down about 17% for the year. AAA reports that gasoline averages $3.17 per gallon, compared to $3.66 a year ago. However, the price drop is pressuring producers, with many nearing unprofitable levels. Asian markets saw limited activity due to holiday closures. Australia's S&P/ASX 200 dropped 1% to 8,157.80, while Taiwan's Taiex slid 1.2%. Currency markets also saw some movement. The US dollar slipped to 144.15 Japanese yen from 144.71 yen, while the euro rose to $1.1329 from $1.1306. On Friday, Wall Street wrapped up its longest winning streak since 2004, with nine consecutive days of gains. Investors were buoyed by a better-than-expected April jobs report and renewed hopes that tensions between Washington and Beijing may ease. The S&P 500 jumped 1.5%, the Dow rose 1.4%, and the Nasdaq also added 1.5%. Despite recent gains, the S&P 500 remains down 3.3% year-to-date and is still 7.4% below its February peak. Technology stocks led the rally—Microsoft climbed 2.3% and Nvidia gained 2.5%. Apple, however, dropped 3.7% after projecting a $900 million impact from US tariffs. Financials also posted gains: JPMorgan Chase rose 2.3% and Visa added 1.5%. April saw employers add 177,000 jobs, a slowdown from March but still above economists' forecasts. With ongoing trade tensions, job growth is being closely monitored for signs of broader economic stress. The US GDP shrank at a 0.3% annual pace in the first quarter, weighed down by a surge in imports as companies rushed to beat looming tariffs. Many firms have pulled back financial forecasts due to uncertainty over tariff impacts and their potential to squeeze both corporate margins and consumer spending. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
