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- China's oil imports from Saudi Arabia are set to rise by 40% next month, according to Bloomberg.
- That's after Chinese refiner Rongsheng Petrochemical brokered a new deal with Aramco.
- The increased flows come despite Saudi Arabia cutting overall crude supply levels in a bid to drive up prices.
Saudi Arabia is set to start sending 40% more oil to China, even though it is bringing in production cuts in a bid to drive up prices and boost its own revenues.
The Gulf Kingdom will send 52 million barrels of crude to the world's second-largest economy in September, per a Bloomberg report that cited traders who participate in the market, up from an expected 37 million barrels this month.
State-owned Saudi Aramco bought 10% of Chinese mega-refiner Rongsheng Petrochemical for 24.6 billion yuan ($3.6 billion) back in March, significantly upping its presence in China as a result.
Aramco agreed to sell Rongsheng Saudi oil as part of the deal.
News of a potential big rise in oil exports to China comes even though Saudi Arabia recently pressed ahead with crude production cuts it had announced back in April. The Middle-Eastern country slashed its output by 10% – or 1 million barrels a day – in a bid to drive up prices.
Key benchmarks are now trading close to three-month highs as a result, with Brent crude up 14% to over $86 a barrel since the start of July and West Texas Intermediate crude jumping 18% to nearly $83 over the same period.
Prices are likely to hold near those levels due to robust Chinese demand and Saudi production cuts squeezing supply, the International Energy Agency said in August oil report on Friday.
Aramco has pledged to give full contractual cargoes to Asian countries even in light of the output cuts. The company said it will fulfil its obligations with South Korea, Taiwan, and Thailand as well as China next month, according to Bloomberg.