Saudi Energy Minister Prince Abdulaziz bin Salman said on Wednesday that Saudi Arabia will remain a trusted and reliable energy partner for China, state news agency SPA has reported.
Prince Abdulaziz told SPA that cooperation between the two countries had helped maintain global oil market stability. Saudi Arabia is the world’s largest oil exporter while China is the world’s largest oil importer.
“The kingdom will remain, in this area, a trusted and reliable partner for China,” Prince Abdulaziz told SPA.
Prince Abdulaziz said Saudi Arabia and China would seek to boost their energy supply chains by establishing a regional center in the Gulf Arab state for Chinese factories.
Chinese President Xi Jinping is attending the first China-Arab States Summit and the China-Gulf Cooperation Council (GCC) summit in Riyadh, Saudi Arabia, and paying a state visit to Saudi Arabia from Dec. 7 to 10 at the invitation of King Salman bin Abdulaziz Al Saud.
The new push by Saudi Arabia has come at a time when Russia has replaced it as China’s biggest supplier of crude. China’s imports of Russian crude have increased massively since the Ukraine war began thanks to the generous discounts Russia is offering for its Urals.
According to Bloomberg’s oil strategist Julian Lee, Russia’s flagship Urals crude oil traded at a massive discount of $33.28, or about 40% to the international Brent crude oil. In contrast, a year ago, Urals traded at a much smaller discount of $2.85 to Brent. Urals is the main blend exported by Russia. The result: Moscow is beginning to feel the heat of its war in Ukraine, and could be losing ~$4 billion a month in energy revenues as per Bloomberg’s calculations.
Washington is, however, not losing sleep over it. “If Russian oil is going to be selling at bargain prices and we’re happy to have India get that bargain or Africa or China. It’s fine,” US Treasury Secretary Janet Yellen previously told Reuters.
China, India and Turkey are the three key swing consumers of Russian crude. It’s quite likely that the three will continue importing more crude from Russia after the EU and G7 countries introduced a $60 per barrel price cap on Russian crude.
The Wall Street Journal has reported that Russian crude exports might have fallen by as much as 50% since the launch of the price cap and additional sanctions.
By Charles Kennedy for Oilprice.com
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