Saudi Arabia seems to have taken advantage of the Russian oil export situation to increase its embrace of Russian oil. Data from Reuters said Saudi Arabia imported some 647,000 tons of Russian fuel oil between April and June, compared with 320,000 tons a year earlier.
The report said Russian fuel oil exports to Saudi Arabia rose almost twofold during the second quarter as the Saudis sought to free up more local crude for export while using the discount imports for power generation.
Saudi Arabia is one of the relatively few countries that use crude oil for power generation, although it has taken steps to reduce this amount by boosting its natural gas output and switching power plants to gas, so there is more crude oil left for exports.
Coming with huge discounts Russia oil and fuel exports due to sanctions have made the country’s fuel oil a preferred feedstock for power plans during peak demand season in the summer.
This increased reliance on Russian fuel, is believed to have formed further reason why President Biden to convince Saudi Arabia to join the price cap on Russian oil and fuels.
Observers note that Saudi Arabia has a very warm relationship with Russia, and signing up for the U.S.-led oil price cap will definitely affect this relationship.
Saudi Arabia is not alone among countries taking advantage of the situation and buying cheap oil and gas from Russia. Bloomberg reported last week that Russian diesel and other fuels that are being shunned by European buyers for fear of sanction violation are being redirected to the Middle East.
Analysts expect the flow of fuels from Russia to the Middle East to continue growing during the second half of the year as well. As of June, Russian fuel exports to the Middle East had reached 155,000 bpd, after rising for five months in a row, Bloomberg said, quoting Vortexa data.
Shipments of fuels from Russia to Middle Eastern buyers, so far in July, are running at an average of 220,000 bpd, the data also showed.
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