The insatiable desire that China has when it comes to finding countries that will sell the country oil appears to have reached a point whereby Russia has replaced Saudi Arabia as its largest foreign supplier.
The information comes from the International Energy Agency, which indicated that the shift came at the end of last year. The supplanting of Saudi Arabia is partly the by-product of the proximity when it comes to geography between Russia and China, which allows for a pipeline of oil to flow into China.
That pipeline began pumping in 2011 and has allowed for exports to increase as much as 550,000 more barrels per day. Prior to that, Russia accounted for only seven percent of China’s oil imports while Saudi Arabia was listed as having 20 percent of that market.
Seeking to keep that edge over the Saudis, Russia has increased the amount of exported oil to China to over 22 million tons in just the first five months of 2016. That’s an increase of nearly 42 percent, according to General Administration of Customs in China.
Those numbers indicate that Saudi Arabia supplied China with 21.8 million tons of oil during the same time frame.
Needing to maintain its market share in the oil industry, Saudi Arabia has taken steps recently to make sure that the country is seen as being flexible. To that end, they signed an agreement in April for a spot sale with an independent Chinese refinery, Shandong Chambroad. Such a step is anything but business as usual for the Saudis, since they’ve usually required a long-term deal to be in place.
One thing is Saudi Arabia’s favor is that their finances aren’t quite as tenuous as Russia, which needs to find any new source for its main export.