Analysts and traders have told Reuters that Saudi fuel oil imports from its OPEC+ partner Russia increased to a record high in June as the Kingdom looks to burn more fuel oil for summer power demand at the expense of crude oil amid the production cuts.
According to data from analytics firm Kpler cited by Reuters, last month, the world’s largest crude oil exporter Saudi Arabia, imported a record volume of 193,000 barrels per day of fuel from Russia, a tenfold surge compared to a year ago.
According to Royston Huan, fuel oil feedstocks analyst at Energy Aspects, analysts believe there is a link between the record fuel oil imports from Russia and the Saudi pledge to cut production. Hence, Saudi Arabia prioritizes fuel oil power generation to keep the crude exports.
Human told Reuters that ” we believe there is a linkage to the cuts, as Saudi Arabia will be incentivized to prioritize their crude exports, therefore prioritizing fuel oil utilities burn over crude oil burn.”
Russia began exporting fuel oil to Saudi Arabia and the Middle Eastern countries this year, as its products are now prevented in Europe, the previous top market for Russian crude and petroleum products.
For Saudi Arabia, inferior Russian imports leave more crude available for exports. Moreover, Saudi Arabia and the UAE, traditional Middle Eastern partners of the United States, have not shied away from importing, storing, trading, or re-exporting Russian files despite American efforts to convince them to join a crackdown on Russian attempts to avoid the Western sanctions on its oil.
Furthermore, Saudi Arabia is also said to be making money from diesel trading after the EU banned Russian fuels, as the world’s top crude exporter is now importing record volumes of reasonable diesel from Russia and exporting record levels of its diesel to the higher-priced Asian market in the Singapore junction.
