Saudi Arabia’s imports of Russian fuel oil have moderated so far in July to 141,000 b/d after hitting a record high of 212,000 b/d in June, according to tanker tracking data from S&P Global Commodities at Sea(opens in a new tab), as the kingdom may have stocked up in preparation for its typical summer surge in power demand.
Saudi Arabia is among several Middle Eastern and Asian countries that have turned to Russia for fuel oil supplies at discounted rates, after the EU placed a full embargo on Russian refined products in 2023 as a stance against Moscow’s invasion of Ukraine.
The influx of Russian barrels may have allowed Saudi Arabia to shift more of its own fuel oil production to exports, which have shot up from 109,000 b/d in May to 248,000 b/d in June, a more than three-year high, according to CAS, with top destinations being Egypt, Spain and Portugal.
Saudi fuel oil exports have remained high in July as well, averaging 329,000 b/d so far.
Analysts with S&P Global Commodity Insights expect Saudi Arabia to continue with high levels of Russian fuel oil imports, given competitive prices and increasing power demand driven by rising summer temperatures in the kingdom.
Saudi Arabia and other Middle Eastern countries will typically see a transition to net-import status for fuel oil by mid-May to supply oil-fired power plants during peak cooling months when temperatures regularly exceed 45 degrees Celsius, according to the analysts.
“Saudi Arabia has ramped up these imports ahead of the summer surge in power demand, as Russian HSFO barrels are generally available at about $3/b to $6/b cheaper than benchmark market prices,” the analysts wrote.
The Platts 380 CST FOB Arab Gulf vs 380 CST MOPAG differential was assessed at $26/mt on July 23, according to S&P Global Commodity Insights.
Other destinations for Russian fuel oil exports included China, Singapore, Malaysia, India, Turkey, along with Egypt, which saw higher fuel oil flows in June when Israel – Egypt’s top gas supplier— turned off the tap during the its conflict with Iran, redirecting the country towards greater fuel oil imports to generate power.
Source: Platts