Saudi Arabia is set to increase crude oil supplies to China in October

Saudi Arabia is expected to increase its crude supply to China in October after the world’s biggest crude exporter cut prices for the oil it sells to Asia, trade sources said. Reuters Thursday.

The kingdom is set to deliver a total of 46 million barrels of crude to China next month, compared with about 43 million Saudi barrels expected to land in the world’s biggest crude importer in September.

China’s biggest state refiners, Sinopec and PetroChina, have asked for more supply from Saudi Arabia loaded for October, trade sources told Reuters.

United cut its official selling prices (OSP) for next month in Asia amid worsening refining margins in China and the wider Asian region and weaker benchmark prices in Dubai.

Saudi Arabia flagship class price, The Arab Lightin Asia for October was reduced by $0.70 per barrel compared to the September price. As a result, demand from China’s biggest refiners rose, while nominations from major private refiners with import quota allocations were held steady for next month, according to Reuters sources.

Asian refiners had expected lower Saudi crude prices for October compared with September prices, partly due to weak refining margins in the world’s biggest importing region.

Saudi Arabia’s latest oil price cut could spur more buying in China, which tends to import higher contracted volumes at lower prices.

China imported the most monthly crude for a year in August as purchases rose as international oil prices fell when the commodity was contracted.

China’s propensity to source goods at lower prices could explain why Most merchandise imports posted higher volumes despite below-expected Chinese economic growth.

With China’s apparent oil demand weaker than expected, lower international prices may have played a bigger role in Chinese purchases for August.

By Tsvetana Paraskova for Oilprice.com

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