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Russia And Saudi Arabia Are Competing For The Asian Oil Market Share

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Asian oil

Asian oil

Following months of increasing volumes of its crude and petroleum products traveling to Asian oil market clients. Particularly China and India, Russian oil is now facing tough competition. According to media sources, Asian oil crude oil deliveries to India have declined for the first time since March. The first signs of a possible reversal of Moscow’s fortunes in Asia are appearing. According to sources, Indian refiners have ordered more long-term supplies from Saudi Arabia. The major competitor of Russia, since Aramco’s price-setting policy. Has made its oil more desirable while Russian prices have risen due to robust demand. In July, India raised its purchases of crude oil from the Kingdom at the same time as Saudi Arabia increased its supply. According to a business insider, India purchased 877,400 bpd of Russian oil in July, a 7.3% reduction from the previous month. Iraq is India’s largest supplier, after Russia.

What is the previous important evidence?

India, the world’s third-largest oil user, and importer imported 3.2% less oil in July than in June. The overall amount generated in July was estimated to be around 4.63 million bpd. The primary cause of the drop is attributed to refinery maintenance slated for August. Furthermore, according to reports, Saudi Arabia delivered 824,700 bpd (25.6%) in July, the largest quantity in the preceding three months. The fact that Aramco reduced the official selling price of its oil in June and July may have contributed to this adjustment. Because of long-term contracts with Saudi Arabia, the bulk of Indian refiners can only modestly adjust their output.

Last month, India’s overall imports of Middle Eastern crude oil fell somewhat. Iraq was severely impacted, with export levels plunging below 1 million bpd. And that was the first time in 10 months. This occurred in July, following a 9.3% volume decline. India’s demand for Russian ESPO grades (diesel rich) has kept Russia strong up to this point. At the same time, it was exerting pressure on West African producers.

Asian oil

In the next months, all attention will be on India as international pressure mounts on it to change its pro-Russian energy policies. The Biden Administration has pushed Delhi to purchase less Russian oil and petroleum products. This, therefore, demonstrates how purposeful the administration’s plan has been. Following Washington’s lead, European nations appear to be striving to encourage India to wean itself from Russian oil. Given that the majority of lawmakers are concerned about rising energy and food prices, The Indian government’s early reactions appear to imply that there is no genuine intention to yield to this pressure.

There have been repeated rumors that India is buying Russian oil and transporting it to Western markets. Western governments will have to face India on these concerns, particularly in NW Europe, if they do not want it to become a home concern. As the Petrologistics graph before shows, Russian-Indian oil is still making its way to Western markets.

Saudi Arabia is gradually gaining a foothold in the Asian market

Meanwhile, Saudi Arabia is increasingly making its way into the Asian swing producer market. Riyadh is continually keen to destroy competition, despite the Kingdom’s lack of genuine ambition to forcefully recapture Asian market share. By raising official output quantities in June, the Kingdom is steadily imposing pressure on others. It would take 218,000 barrels per day to achieve 8.79 million barrels per day. In June 2022, Saudi Arabia’s oil exports climbed by 20.1%, or 1.47 million bpd, year on year. In June, Saudi Arabia’s oil exports jumped by 146,000 bpd month on month to 7.2 million bpd. Despite the fact that Saudi Arabia’s oil inventory (crude oil and products) declined by 1.01 million bpd in June. The aggregate rise does not reflect a significant increase in productivity.

In the next months, markets will be watching China’s economic market circumstances, India’s oil import tactics, and any potential internal OPEC+ market share issues. Although Riyadh and Moscow remain close friends, the country’s internal are rising and opportunities to limit the rival’s market share are emerging. It is possible that the current EU oil restrictions may take some time to take effect. They will, however, push Russia to deliver further oil to already overstressed markets. The likelihood of Western sanctions on third parties, notably India and maybe China, would present greater chances for the Government. Controversy surrounds whether such a move will benefit Aramco or its neighbor ADNOC. However, the world’s swing producer still has some oil production capacity. Saudi Arabia has far higher financial reserves than Moscow, giving it more leeway to experiment with OSPs if needed.

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