At the expense of Russia, Saudi Arabia increases its share of crude oil in Asia

In November, Russia gave up some of its barrels of crude oil, which could be a precursor to a change in market dynamics, while Saudi Arabia regained market share of Asia’s imports. According to data published by LSEG Oil Research, Asia’s imports from Saudi Arabia, the largest crude exporter in the world, increased from 5.28 million barrels per day (bpd) in October to 5.83 million bpd in November.

According to LSEG, Russia’s supplies to Asia, the region that imports the most, fell to 3.51 million barrels per day in November from 3.96 million in October. This is the lowest level since January. According to the data, Russia’s imports decreased by 450,000 bpd in November, while Asia’s imports from Saudi Arabia increased by 550,000 bpd.

Even when Saudi Aramco, the kingdom’s state-owned oil company, raised the official selling price for its crude to Asian clients for November-loading cargoes, the trend toward Saudi Arabian barrels from Russia continued. The benchmark Oman/Dubai average for November was surpassed by $2.20, or 90 cents a barrel, by Aramco’s benchmark Arab Light grade. The uptick was perceived at the time as a sign that refining margins in Asia were improving, and it did occur after the premium had fallen to its lowest level in over three years in October.

A typical Singapore refinery’s profit from refining a barrel of Dubai crude increased to $6.62 on Nov. 29. Since the current uptrend began on Oct. 10, when it touched $1.95, the profit has increased 240%. In comparison to other grades, such as Russia’s Urals, which is the primary oil exported from its western ports, Saudi crude has become more price competitive in Asia, despite the rise in Aramco’s November OSPs. On Nov. 29, cash Dubai crude closed at $71.83 per barrel, $4.36 higher than Russia’s Urals, which closed at $67.47.

It has been trading above $5 a barrel for most of the last few months, although this premium is reduced now. Due to the lengthier sea route from Russia’s ports in the Baltic to destinations in Asia, the cost of transporting Russian petroleum is also greater. As further sanctions are imposed on Russia’s alleged “shadow fleet” of tankers—Britain imposed new measures against 30 boats last week, bringing the total to 73—these expenses are also expected to rise.