Saudi Arabia emerged as one of the largest purchasers of Russian fuel oil in September, according to recent data from LSEG. Despite a slight dip in imports compared to August, the Kingdom remains a key player in Russia’s seaborne fuel oil and vacuum gasoil (VGO) market, alongside China. As Russia continues to pivot its oil exports towards Asian markets, Saudi Arabia’s demand, even in the post-summer period, has highlighted its strategic importance in global oil trade.
Saudi Arabia’s Role in the Russian Oil Trade
Russia’s fuel oil and VGO exports have shifted primarily towards Asia since the European Union enforced its full embargo on Russian oil products in February 2023. Saudi Arabia, alongside China and India, has become a major buyer, demonstrating the Kingdom’s reliance on Russian supplies to meet its energy needs.
While the Kingdom reduced its imports by 10% in September due to the seasonal end of peak summer demand, it still imported 0.7 million tons of Russian fuel oil and VGO, making it the second-largest importer after China.
- Saudi Arabia’s Imports (Sept 2024): 0.7 million tons (10% decrease)
- China’s Imports (Sept 2024): 0.8 million tons (1% increase)
This trend underscores Saudi Arabia’s significant position in the global oil market, particularly in absorbing Russian oil that has been redirected away from Europe.
The Shifting Dynamics of Russian Fuel Exports
As Russia continues to look eastward for buyers, the export of fuel oil and VGO from Russian ports has been on the rise. In September, total exports from Russia grew by 2% from August, reaching 4.2 million metric tons, with the majority heading to Asian markets.
Country | Russian Fuel Oil & VGO Imports (Sept 2024) |
---|---|
China | 0.8 million tons (1% increase) |
India | 0.3 million tons (53% increase) |
Saudi Arabia | 0.7 million tons (10% decrease) |
South Korea | 150,000 tons (1% decrease) |
Asian countries, particularly China and India, are increasingly turning to Russian fuel oil as a cheaper alternative to traditional crude oil, using it as feedstock for their refineries. This shift in trade has been driven by both the embargo and the competitive pricing of Russian oil products, which are offered at discounts compared to international benchmarks.
The Role of Singapore and Greek Ship-to-Ship Loadings
The shipping data also indicated that around 300,000 tons of dark oil products from Russian ports are currently en route to Singapore, a key global hub for fuel oil bunkering. However, not all of these shipments are expected to remain in Singapore. Many tankers use Singapore as a waypoint before continuing to other Asian ports, particularly in China.
In addition to direct shipments, a significant portion of Russian fuel oil is being transferred via ship-to-ship loadings near Greek islands. In September, nearly 350,000 tons of Russian oil products were handled in this manner, with most of these cargoes ultimately destined for Asia.
This complex network of trade routes reflects the ongoing adaptability of Russia’s oil exports, with Asian markets serving as the primary outlet for its oil products.
Conclusion: Saudi Arabia’s Strategic Role Continues
Despite the seasonal drop in Saudi Arabia’s imports of Russian fuel oil in September, the Kingdom remains a crucial player in this evolving trade relationship. As Saudi Arabia balances its domestic energy needs with global market dynamics, its role as a leading buyer of Russian oil products, alongside China and India, is likely to remain pivotal for both countries.
With the European embargo in place and Asian markets absorbing the redirected flows, Saudi Arabia’s energy decisions will continue to shape the future of Russian oil exports. The global oil landscape is shifting, and Saudi Arabia’s strategic importance in this changing dynamic is more evident than ever.