Saudi Arabia will sharply reduce crude oil shipments to China for loading in June [1].
This drop in volume signals a tightening of energy ties between the world's largest oil exporter and its largest importer. The decline comes as China faces pricing pressures and the Middle East grapples with war-related supply disruptions.
Estimates for the June shipments vary across reports. Some data suggests exports will fall to between 13 million and 14 million barrels [1]. Other reports indicate a more severe plunge to 10 million barrels, which would represent a record low for the trade route [2].
Price volatility has played a central role in the shift. Saudi Aramco set the June Arab Light crude oil official selling price for Asia at $15.50 a barrel above the Oman/Dubai average [3]. While this figure is lower than the previous month, the pricing remains a point of contention for Chinese refiners.
"Saudi Arabia has set the June Arab Light crude oil official selling price to Asia at $15.50 a barrel above the Oman/Dubai average, down from the previous month," Saudi Aramco said [3].
The downturn is further complicated by geopolitical instability. Supply disruptions linked to the war in the Middle East have upended typical shipping patterns and influenced global prices [4]. These disruptions, combined with reduced demand from Chinese refineries, have forced a recalibration of export volumes.
Some analysts suggest the volume of crude supplied in May could be halved compared to April levels due to previous price hikes [5]. This trend highlights the sensitivity of the Chinese market to the Official Selling Price (OSP) adjustments made by the Saudi government.
“Saudi Arabia will sharply reduce crude oil shipments to China for loading in June.”
The potential record low in Saudi exports to China reflects a volatile intersection of geopolitical risk and economic friction. By maintaining a high premium on Arab Light crude despite the conflict in the Middle East, Saudi Arabia is testing the price ceiling of Chinese refiners. If China continues to pivot away from Saudi crude due to cost, it may accelerate the search for alternative suppliers or increase domestic production to mitigate the risk of supply chain instability in the Hormuz region.
