Asian countries are increasingly purchasing oil from Saudi Arabia while reducing their imports from Russia.

Asian countries are increasing their oil purchases from Saudi Arabia while reducing them from Russia, reports Reuters.

The volumes of Saudi oil flowing to Asian countries have historically surpassed those from Russia. However, in the past three months, a significant widening of this gap has emerged, particularly pronounced in November. According to LSEG Oil Research, the average daily import of Saudi oil rose from 5.28 million barrels in October to 5.83 million barrels in November, while Russian imports fell from 3.96 million to 3.51 million, the lowest level since January.

Consequently, the gap in monthly supplies reached a record high of 2.32 million barrels this year.

Russia, in its quest for foreign currency for its oil, is relying solely on China and India, whereas Saudi Arabia has a significantly larger customer base. Notably, both of Russia's main buyers have shown a preference for Saudi oil, as highlighted by Reuters:

• China reduced its purchases of Russian oil from 2.19 million to 2.04 million barrels, while India decreased its imports from 1.75 million to 1.47 million;
• at the same time, China increased its import of Saudi oil from 1.62 million to 1.68 million barrels, and India raised its imports from 610,000 to 770,000 barrels.

One of the reasons for this shift is the tightening of Western sanctions on vessels belonging to Russia's shadow fleet. Last week, the UK blacklisted 30 ships, bringing the total number of tankers under restrictions to 73. This means that Russia will find it increasingly difficult to secure vessels for transporting oil and petroleum products.

Additionally, next year the competition for customers may intensify. Oil consumption in Asia in 2024 is expected to be lower than the previous year. For the first 11 months of this year, imports averaged 25.52 million barrels per day, which is 370,000 barrels less than during the same period last year.

The primary reason for the decline is reduced demand from China, whose economy is slowing down, and the real estate market (which, along with the construction sector that supports it, is a major consumer of oil and petrochemical products) is in crisis. Meanwhile, the country is switching trucks to gas, rapidly increasing the production of electric vehicles (which now account for more than half of sales), and expanding solar power generation.

Background. Let us remind you that Trump, just a few days after his inauguration, will unveil a plan for a significant increase in oil production. He also intends to repeal some of the key climate laws and regulations enacted by Biden.