Russia has overtaken Saudi Arabia to now become China’s top crude dealer for the first time since October 2005 as the tussle for market share in the world’s second-largest oil consumer has intensified, Bloomberg reports.
In May, China imported a record 3.92 million metric tons of crude oil from Russia, which accounts for 927,000 barrels per day or a 20 percent surge from the previous month, whereas Saudi Arabia’s sales have slumped 42 percent from April to 3 million metric tons.
China has become a key market for global oil exporters as a surge in output from U.S. shale fields allows the U.S. — the biggest crude consumer — to rely less on supplies from overseas.
According to the International Energy Agency, China will account for over 11 percent of world demand for crude oil supplies this year.
“This is a clear sign of how spoilt Asia is for choice these days, with Middle Eastern crude now having to compete with oil from other regions,” Amrita Sen, the chief oil-market analyst at Energy Aspects Ltd., told Bloomberg in an e-mail interview.
“Russia is increasingly looking east and the various deals made between Rosneft and China are likely to see more Russian crude head to China permanently,” he said.
“Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura, told Bloomberg.
“If Saudi Arabia wants to recapture its number one ranking, it needs to accept the renminbi for oil payments instead of just the dollar,” he said.
In comparison to Russia in May, Iran has exported 2.2 million tons to China, according to customs data.
Iran has estimated that it could double its global crude sales within six months after international sanctions are lifted as of a June 30 deadline for a nuclear deal approaches.
“Russia is using its good relationship with China to increase supplies and has now taken the top spot,” Gao Jian, an analyst at SCI International, told Bloomberg by Phone. “Meanwhile, Saudi Arabia is losing its crown as its selling prices in Asia haven’t been attractive enough.”
In May 2014, China and Russia signed a massive $400 billion gas supply deal in which Russia will annually deliver 38 billion cubic meters of gas to China, the biggest contract in the history of Russia’s gas sector.