Russian crude oil too cheap for Saudi Arabia to resist?

Saudi Arabia imported double the amount of Russian crude during the second quarter of 2022, seeking to free up more local crude for export while using the Russian oil for energy generation.

Reuters reported that Saudi Arabia, compared with 320,000 tons a year earlier, imported some 647,000 tons of Russian fuel oil between April and June.

KSA is one of the very few countries using crude oil to produce energy, however, they have been shifting to gas-based power plants in the recent past to have more crude for export.

Russian fuel has become a preferred import for power production and stock after the discounts in Russian oil and fuel exports due to sanctions.

However, President Biden’s task to convince Saudi Arabia to join an oil price cap on Russian oil and fuels has become even more difficult due to this increased reliance on Russian fuel.

The signing of the U.S -led oil price cap could mean the end of a close relationship the KSA has been having with Russia.

Moreover, KSA is not the only country importing the cheaper Russian crude oil.  This 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, Bloomberg reported.

In fact, experts forecast growth in import of Russian crude oil in the second half of the year. Bloomberg, quoting Vortex data, said that as of June, Russian fuel exports to the Middle East had reached 155,000 bpd, after rising for five months in a row.

Also Read: Why India ramped up Russian oil imports

So far in July, shipments of fuels from Russia to Middle Eastern buyers are running at an average of 220,000 bpd, the data also showed.