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Saudi Arabia Turns Down Chinese Requests For More Crude Oil

Posted by: : Paul Ebeling Posted on: May 20, 2015

Research found Saudi Arabia’s share of Chinese Crude Oil imports dropped to just over 30% in May from 36.5% in April

Saudi Arabia and its main Middle East OPEC partners are turning down Chinese requests for more Crude Oil as they hold back fuel for their own refineries just as demand from the world’s biggest Crude importer hits new records.

While the Saudi and other refusals for additional Crude Oil supplies may not be part of a new pricing strategy, the rejections to their biggest client help explain a 40% rise in prices this year as Chinese importers have had to seek more Crude Oil from other suppliers in what analysts say is still an oversupplied market.

Senior Chinese Oil traders say the Saudis have turned down requests from Chinaoil and Unipec, the respective trading arms of PetroChina (NYSE:PTR) and Sinopec (NYSE:SHI), for extra cargoes of crude for May and June loadings, forcing them to seek supplies from producers in West Africa, Oman and Russia.

Saudi Arabia “used to provide us and if we asked for extra cargoes on top of contract during the 1st 4 months of the year, but not for May and June,” said a trader with 1 of China’s biggest Crude Oil importers.

Another source with a Chinese refinery that takes Saudi Oil said Saudi heavy Crude was “a bit tight” in May and June.

Recent pricing and trade flow data show a 40% rise in Brent Crude Oil since January has coincided with a more than 10% fall in overall Middle East supplies to China, although in historical terms they remain high.

Saudi Aramco, not available for comment, has reduced contractual supplies to some Japanese and South Korean customers in April.

The trader with 1 of China’s big importers said requests for more Crude Oil to Kuwait and the United Arab Emirates (UAE) were also turned down.

PetroChina and Sinopec officials seldom comment on trading activity.

http://www.livetradingnews.com/saudi-arabia-turns-down-chinese-requests-for-more-crude-oil-105438.htm#.VV4yqk1FCUk

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*are these the ever so small beginning signs the Saudi's have reversed policy? I think the answer has to be a yes...