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Russian fuel oil exports to Saudi Arabia rose almost twofold during the second quarter as the Saudis sought to free up more local crude for export while using the discount imports for power generation.
According to Reuters data, Saudi Arabia imported some 647,000 tons of Russian fuel oil between April and June, compared with 320,000 tons a year earlier.
Saudi Arabia is one of the relatively few countries that use crude oil for power generation, although it has taken steps to reduce this amount by boosting its natural gas output and switching power plants to gas, so there is more crude left for exports.
The discounts in Russian oil and fuel exports due to sanctions have made Russian fuel oil a preferred feedstock for power plans during peak demand season in the summer.
This increased reliance on Russian fuel, however, is likely to make President Biden’s task to convince Saudi Arabia to join an oil price cap on Russian oil and fuels all the more challenging.
The Saudis already have a close working relationship with Russia, and signing up for the U.S.-led oil price cap will kill this relationship.
Saudi Arabia is not the only one increasing its intake of Russian fuels, either. Bloomberg reported earlier 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.
Some analysts expect the flow of fuels from Russia to the Middle East to continue growing during the second half of the year as well. As of June, Russian fuel exports to the Middle East had reached 155,000 bpd, after rising for five months in a row, Bloomberg said, quoting Vortexa data.
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.
