Russia retains customers for its hydrocarbons. Since the invasion of Ukraine almost four months ago, the country has been affected by international sanctions imposed on it, in particular by Western states. To compensate for these export losses, Moscow is increasing exports to China, India and several countries in Africa and the Middle East, which also benefit from reduced prices.
Among these privileged geographical areas, Saudi Arabia stands out. The world’s largest oil exporter more than doubled its imports of Russian fuel oil in the second quarter of 2022, according to Reuters figures. It is a precious resource for the kingdom, which it uses to power its power plants. This strong increase also responds to a trade balance problem for the Middle Eastern country, which wants to preserve its crude stocks for export and meet the traditionally strong summer demand.
Biden wants OPEC to increase oil production
Always motivated by the challenge of isolating Russia to deprive it of revenue from its hydrocarbon exports, Joe Biden is taking a close interest in these fuel oil sales. At the end of last week, the American president went, among other places, to Saudi Arabia with a well-defined objective: to convince the country to increase the production of the Organization of the Petroleum Exporting Countries. Such an increase would make it possible to reduce the price of black gold, which plays an important role in the current inflationary tensions.
Problem: The kingdom maintains strong ties with Russia, despite antagonism from a significant part of the international community over the ongoing war in Ukraine. Above all, the country has little room to increase its oil production capacity.
Strategic imports for Riyadh
According to data consulted by Reuters, Saudi Arabia imported nearly 50,000 barrels per day of Russian fuel oil between April and June for a total of 647,000 tons in these three months. Last year, Russia exported “only” 320,000 tonnes to Riyadh during the same period. During all of 2021, Saudi Arabia finally passed the one million tonne mark of imported Russian fuel oil.
These imports of Saudi fuel oil from Russia are not new. They constitute a strategic lever to reduce the needs of the kingdom in the refining of crude oil for its products. They also make it possible to reduce the amount of oil that Saudi Arabia must use to produce electricity, which at the same time increases its stocks destined for export and on which it obtains significant margins.
Source: BFM TV
