Weak Demand in China Leads to Lower Oil Supply from Saudi Arabia

Saudi Arabia, the world's top crude exporter, is set to reduce its oil deliveries to China in December due to weaker-than-expected demand from the world's largest oil importer. Despite lowering the official selling prices (OSPs) of its crude for the Asian market, the Kingdom is still expecting a decline in the volume of crude oil being shipped to China.

Saudi Arabia's crude oil supply to China will be at its lowest level since July, with an estimated 36.5 million barrels set to be delivered in December. This marks a drop from the 37.5 million barrels expected in November and the 46 million barrels delivered in October, according to trade sources.

The reduction in Saudi oil exports comes as major Chinese refiners, including PetroChina, Sinopec, and Sinochem, are projected to lift fewer cargoes. Despite a price reduction on Saudi crude grades like Arab Light, the weak demand from China’s state-owned giants and independent refiners, known as "teapots," is expected to keep import volumes low.

Weaker-than-Expected Demand from China

China’s crude oil imports have been disappointing this year. October marked the sixth consecutive month of underperforming imports, with cargo arrivals lagging behind the same months in 2023. Factors contributing to this decline include reduced capacity at a PetroChina refinery and ongoing low demand from China's independent refiners.

This reduced demand may have been a factor in OPEC+'s decision to delay the easing of its production cuts, which are now expected to begin in January 2025 rather than December 2024. While the cartel has not provided a specific reason for the delay, it’s clear that the global oil market is being affected by China’s ongoing weak demand.

QatarEnergy Expands International Exploration Footprint

In a separate energy development, QatarEnergy has signed an agreement to acquire a 23% working interest in an offshore oil concession in Egypt from Chevron. This deal covers the North El-Dabaa (H4) Block in the Mediterranean Sea, with Chevron retaining a 40% interest, and other partners including Woodside and Tharwa Petroleum.

QatarEnergy's expansion into Egypt is part of its broader strategy to grow its presence in international energy markets. Earlier this year, the state-owned company also entered into an agreement with ExxonMobil to acquire a 40% interest in two other offshore exploration blocks in Egypt.