Arab News, Thursday, Jul 29, 2021 | Zul Hijjah 19, 1442
Saudi Arabia edges out Russia in Chinese oil market as high prices dim Urals demand
Saudi Arabia:
Russia’s flagship Urals crude oil has mostly been used in Europe so far this
year due to relatively low output and high prices, while Asian markets have
shunned the blend, data showed on Wednesday.
As a result, Russia has lagged behind Saudi Arabia in China’s energy market, one
of the world’s largest.
According to Refinitiv Eikon data, the port of Rotterdam, Europe’s biggest oil
hub, received 9.7 million tons of Urals in the first half of this year, up from
7.3 million tons in the same period last year.
At the same time, supplies of seaborne Urals cargoes to China plunged to 1.8
million tons from 7.86 million in the first half of 2020.
This year, the spread between Brent — to which Urals is linked — and the Middle
Eastern Dubai blend has reached an all-time high of more than $4 per barrel,
making Russian oil uncompetitive in Asia.
India has also cut
purchases of Urals, while South Korea and Thailand have completely stopped
intake of the blend.
Some European countries, notably Finland, have also reduced purchases of
seaborne Urals amid the move to greener economies.
Turkey, Bulgaria and Romania have kept inflows of Urals steady this year, while
Poland and Germany have increased imports of the seaborne blend.
According to Refinitiv Eikon, the port of Gdansk in Poland imported 2.7 million
tons of Urals in January-June, up from 1.7 million in the first half of 2020.
Seaborne supplies have also risen amid reduced flows via the Soviet-built
Druzhba pipeline as some companies have failed to agree supply deals. For
example, Poland’s Grupa Lotos has not extended a contract with Russia’s Rosneft.
The United States also increased imports of Urals to 500,000 tons in the first
half of the year from 100,000 tons in the same period of 2020.
Some traders believe Russia will increase supplies of Urals as the OPEC+ group
of oil producers, of which it is a member, eases production curbs.