A new competition for crude oil market share in Asia appears to be emerging as major exporters Saudi Arabia and Russia increase their oil shipments to the region. With China being the world’s leading oil importer, it has become a focal point for both nations, who, despite being part of the OPEC+ coalition, are now vying for dominance in a pivotal market.
Recently, Russia surpassed Saudi Arabia as the primary supplier to China. This shift primarily stems from Russia’s need to offer discounts on its crude due to Western sanctions linked to its actions in Ukraine.
As a result, China and India have become the key buyers, with only a minor portion directed to smaller nations like Myanmar. However, Russia’s exports to China have faced setbacks in the early months of the year.
New shipping sanctions implemented by the previous U.S. administration contributed to a notable decline in imports, with February figures dropping to 969,000 barrels per day (bpd), the lowest since December 2022. India, which has also pivoted towards Russian oil post-sanctions, has likewise reported decreased imports from Russia.
With 1.43 million bpd in February, this marked a decline from January levels. Nevertheless, both China and India are anticipated to rebound in their purchases in March, aided by traders’ adaptations to the sanctions.
In response, Saudi Arabia is not standing still. Kpler reports indicate expected imports to China will reach 1.64 million bpd in March, a significant increase from earlier months.
Furthermore, the kingdom has reduced the official selling prices of its oil, suggesting an intention to enhance market share. As U.S. foreign policy shifts under new leadership, Russia’s exporters could gain an advantage in their oil transactions, potentially leading to a fierce battle for market share in Asia.
This emerging competition may eventually exert further downward pressure on global oil prices.