Saudi oil import from Russia doubles in second quarter
The increased sales of fuel oil to Saudi Arabia highlight the challenges the US President faces as he seeks to court MBS to increase Saudi oil output among others.
Saudi Arabia, the world's largest oil exporter, more than doubled the amount of Russian fuel oil it imported in the second quarter to feed power plants to meet summer cooling demand and free up the Kingdom's own crude for export as per trade data and analysis.
Russia has been selling fuel at reduced prices as a result of batches of draconian Western sanctions following the war in Ukraine.
The increased sales of fuel oil to Saudi Arabia, which is used in power generation, highlight the challenges the US President Joe Biden is facing as his administration seeks to isolate Russia and reduce its energy export revenues, not to mention courting MBS to increase Saudi oil output.
Biden was in Saudi Arabia, on Friday, and was expected to seek an increase in oil supply to global markets from the Kingdom in order to help lower oil prices, which have exacerbated global inflation.
It is worth noting that Russian oil imports have also increased in China, India, and several African and Middle Eastern countries.
However, Saudi Arabia and others have little spare capacity to increase production. Saudi Arabia has also maintained its cooperation with Russia in the OPEC+ global producer alliance. In that group, they are the de facto leaders of OPEC and non-OPEC producers.
Saudi Arabia imported 647,000 tons (48,000 barrels per day) of fuel oil from Russia via Russian and Estonian ports in April-June of this year as per data obtained by Reuters through Refinitiv Eikon ship tracking.
This was an increase from 320,000 tons in the same period last year.
Saudi Arabia imported 1.05 million tons of Russian fuel oil in 2021.
Saudi Arabia has been importing Russian fuel oil for several years, which can reduce the amount of oil it needs to refine for products and reduce the amount of oil it needs to burn for power, leaving it with more unrefined crude to sell on international markets at higher prices.
The Kingdom relies on oil to meet its power needs, which typically peak as summer temperatures rise. Some Saudi cities are located at a long distance from natural gas fields, which could provide cleaner fuel for power generation.
According to the Joint Organizations Data Initiative (JODI), the volume of crude burned is approximately 600,000 bpd in the summer and 300,000 bpd in the winter. Natural gas use has increased, reducing the amount from as much as 1 million bpd in 2010.
Saudi Arabia has also imported more Russian fuel oil through the Middle East oil hub of Fujairah in the United Arab Emirates, according to traders.
Fujairah has received 1.17 million tons of Russian fuel oil so far this year, up from 0.9 million in the same period last year.
An additional 0.9 million tons could be delivered to Fujairah in July alone, bringing the total to 2.1 million so far this year, exceeding the 1.64 million tons for the entire year of 2021 as per shiptracking.
In the meantime, crude and product exports were at or near an all-time high of 9 million bpd in February-April, according to JODI figures, with crude exports alone at or near 7.3 million bpd.
Read more: Biden goes home with no Saudi commitment on oil production: WSJ