New Delhi: In order to meet demand for summer cooling and free up its own crude for sale, Saudi Arabia, the world’s top oil exporter, more than doubled the amount of Russian fuel oil it imported in the second quarter, according to data and dealers.
Due to international sanctions for its invasion of Ukraine, Russia has been forced to sell petroleum at a discount. Moscow refers to the Ukrainian conflict as a “special military operation.”
The rising shipments of fuel oil to Saudi Arabia, which is used to generate electricity, highlight the difficulty facing U.S. President Joe Biden and his team as they work to isolate Russia and reduce its energy export profits.
China, India, and a number of countries in Africa and the Middle East have expanded imports from Russia while many other countries have prohibited or discouraged such purchases.
Biden was in Saudi Arabia on Friday, and it was anticipated that he would ask the country to raise its oil production to the world market in order to assist reduce oil prices, which have exacerbated global inflation.
Saudi Arabia and other countries don’t have much room to spare to boost output in the near future. Additionally, Saudi Arabia has continued to work with Russia in the OPEC+ producer coalition. In that group, the two are the de facto heads of the OPEC and non-OPEC producers, respectively.
Saudi Arabia purchased 647,000 tonnes (48,000 barrels per day) of fuel oil from Russia through Russian and Estonian ports in April through June of this year, according to data obtained by Reuters through Refinitiv Eikon ship tracking. That increased from 320,000 tonnes during the same time last year.
Saudi Arabia imported 1.05 million tonnes of Russian fuel oil during the entire year 2021. The energy ministries of Saudi Arabia and Russia declined to comment on the rising imports.
Rising cargoes of fuel oil of Russian origin passing through Egypt and Estonia, according to energy analytics company Vortexa, increased imports.
It was discovered that while Egypt’s imports of Russian fuel oil increased to a record 70,000 bpd in June, Saudi fuel imports from Egypt surged to a record 110,000 bpd.
“Seasonal demand for power generation feedstocks pushed fuel oil imports into Saudi Arabia to 320,000 barrels per day in June, the highest since November 2020,” the firm said.
Saudi Arabia has been importing Russian fuel oil for a number of years, which can lessen the amount of oil it needs to burn for electricity and reduce the amount of crude that needs to be refined for goods, giving it more unrefined crude to sell on global markets at higher prices.
The kingdom uses oil to supply its energy needs, which normally reach their peak as summertime temperatures increase people’s desire for cooling. Natural gas resources that could provide cleaner fuel for electricity generation are far away from some Saudi cities.
According to data from the Joint Organizations Data Initiative (JODI), around 600,000 bpd of crude is burned in the summer and 300,000 bpd in the winter. From as high as 1 million bpd in 2010, the amount has decreased due to increased use of natural gas.