OilPrice: Moscow uses price cap and embargo to "kick" Saudi oil out of China

Demand for oil in China is rising with the resumption of business activity after almost three years of tight restrictions. Initially, the predicted trend in demand was for a recovery in business and consequent erratic consumption of raw materials, but analysts say China will account for half of global oil demand growth this year, with total global oil demand hitting record levels.

Accordingly, the leaders of the OPEC+ group, Saudi Arabia and Russia, will compete to meet growing demand from the world's largest importer of crude oil, trying to take a leading position in the premium market. The two main suppliers in this sense came together in a serious fight for the "returning" China. This forecast is given by OilPrice columnist Tsvetana Paraskova.

Saudi Arabia sells crude oil under long-term contracts, so it is guaranteed a certain share of the Chinese market. But Russia, which has switched to Asia to sell oil and fuel after Western sanctions, is offering its oil at a discount and could attract more Chinese buyers who do not respect G7 price caps.

Prices set by Riyadh cannot compete with discounted Russian barrels, and Chinese buyers can ask Saudi Arabia for the minimum volumes allowed under long-term contracts. Thus, Moscow has very successfully learned to use price cap formalism and two types of embargoes to its advantage, at least in the fight against such a strong competitor as Saudi Arabia, especially for such a supply region as Asia.

It is noteworthy that the Russian Federation even has a very good excuse to its partners from OPEC + why Russian oil has a monopoly and price advantage in China, driving all other suppliers and their exports out of the market. And there is no “fault” of Moscow in the current situation, which is why, despite the displeasure of Riyadh, all profits will go to domestic producers absolutely legally.
  • Photos used: pixabay.com
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  1. prior Offline prior
    prior (Vlad) 12 February 2023 09: 54
    You might think that a price war between OPEC countries would lead to something good.
    1. Paul3390 Online Paul3390
      Paul3390 (Paul) 12 February 2023 18: 45
      Why the price war? To the Arabs - the market of Europe that has been liberated from us, to us - Asia. A completely equivalent exchange, all the more so - they don’t have enough oil for both regions at once ..
  2. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) 12 February 2023 10: 05
    It's all nonsense, sucked from the finger.
    Capitalism in the yard. Super-cheap China will take and resell. So far, cheaper, and even cheaper than the "marginal prices of G7"
    But they wrote that Russian oil is simply not enough for all of China
  3. boriz Offline boriz
    boriz (boriz) 12 February 2023 16: 16
    OilPrice is wishful thinking. We have long had peace, friendship and mutual understanding with the Arabs.
    All changes in the market are discussed in advance, the Arabs know that Russia will not bully like the United States.
    Again, they have a guilt complex. They have long understood what a fool they were playing, helping to destroy the USSR in the late 1980s. As soon as the EU imposed sanctions against the Russian Federation, the KSA lost 1st place in terms of oil supplies to China to Russia within a month. Retiring to the second. And having received a freed piece of the market in Europe. They act tough there. And for the United States, they introduced exclusive (increased) prices for their oil since March. Just when they want to restore their strategic reserves.
  4. art573 Offline art573
    art573 (Artyom Vladimirovich Yarovikov) 12 February 2023 18: 51
    Russia borders on China. Where are the Saudis? Through the Indian Ocean! Tankers also need to sail in the Pacific Ocean ... This is long and expensive, and Russia can sell oil to the Chinese on an ongoing basis through a pipeline and pumps into the lungs, in response, plastic, rubber, computer and electronic components and components for oil, electrical equipment for our voltage/current. The same clothes on cotton with synthetics from China ...
  5. Dust Offline Dust
    Dust (Sergei) 13 February 2023 02: 56
    Complete nonsense! If it were so, Russia would not unilaterally reduce oil production by 500 thousand barrels, and Saudi Arabia would not raise its oil prices.