In a surprising development, Angola crude oil exports to China topped both Saudi Arabia’s and Russia’s for the month of July, with the African country beating the two traditional contesters in the race to the top spot among exporters to the Asian nation.
Chinese customs data, as cited by Reuters, show that Angolan oil exports to China reached 4.72 million tonnes in the reporting month, or a daily average of 1.11 million barrels per day. This represents a 23.3 percent increase on an annual basis.
This increase was driven by higher demand from Chinese teapot refineries as they sought to take advantage of the cheaper Angolan oil: the African blend trades below both Russia’s ESPO and the Middle East’s Dubai benchmark blends.
Still, over the first seven months of the year, the Saudis topped the list of China suppliers of crude, with an average daily rate of 1.05 million bpd, according to customs data. This gave the desert kingdom a 14-percent market share in China’s oil market, eking out 0.4 percent more than Russia’s exports to China, which is still breathing down the Saudis’ necks in this part of the world, exporting an average of 1.02 million bpd in the seven-month period. Russia did manage to overtake Saudi Arabia as China’s top supplier in three of the seven months.
To put this in some perspective, in 2015, Saudi Arabia held a 15.1-percent share of the Chinese oil market, while Russia’s share was 12.6 percent. The latter’s market share build was made possible by these same teapot refineries, which Russia sold crude to at spot prices—a practice that Saudi Arabia also turned to earlier this year.
This demand, however, has subsided this month, as Beijing puts into place stringent curbs on manufacturing activity and power generation in a bid to decrease air pollution ahead of the G-20 summit in Hangzhou in September. Crude oil consumption should fall by 250,000 bpd, helped by a barrage of floods that drowned China last month.
By Irina Slav for Oilprice.com
