China’s largest oil supplier reduces its oil production by 50%. What impact will it have on China? Will the oil price rise to US$100?
Saudi Arabia’s oil production will be halved, and the oil price will rise to US$100? What impact will it have on China?
Summary: Due to two major Attacks on oil fields will reduce Saudi oil production by half. However, Saudi Arabia has been one of China's major oil suppliers in recent years and once became China's largest oil seller this year. What impact will Saudi Arabia's oil production have on China?
Will the international oil price rise to US$100?
| Will the international oil price rise to US$100?
[China Petroleum Network] News: Two major oil facilities in Saudi Arabia were attacked, 9 Within minutes of the start of trading on March 16, international oil prices soared.
html On September 16, Brent crude oil rose nearly 20% to US$72/barrel, the largest intraday increase in 28 years. In early trading in Asia on September 16, WTI crude oil also opened about 10% higher.Reuters quoted analysts as reporting that due to the attack, Saudi Arabia's oil production will be reduced by 5.7 million barrels per day, which accounts for 50% of Saudi Arabia's crude oil production and is equivalent to about 5% of global supply.
analyzed that if Saudi Arabia’s oil production capacity can be restored in the short term, international oil prices are expected to rise by about 10%. If the two Saudi oil facilities are hit harder than expected, international oil prices may rise by 15% to 20%. If Saudi Arabia cannot quickly restore supply, the nightmare of $100 per barrel oil prices may return.
Some sources revealed that "it may take weeks, not days, for Saudi Arabia to restore full production capacity." In other words, Saudi Arabia will not be able to restore production capacity in the short term.
|Who will fill the gap?
You must know that Saudi Arabia’s reduced oil production is equivalent to 5% of global oil supply. The 5% excess in the global oil market is a gap that must be filled by oil-producing countries.
According to a Reuters report on the 16th, Russian Energy Minister Alexander Novak said that the attack affected global energy security, but there are still sufficient oil reserves to offset the production gap.
When asked whether Russia needed to increase production to offset the Saudi shortfall, Novak said: "Everything currently depends on Saudi Arabia's assessment of the consequences of the attack, which will directly affect the scale of global production. At present, global commercial oil reserves are enough to make up for it. There is an oil gap in the short and medium term. "
said so, but Russia's new decision announced on the 16th has shown that the country hopes to expand exports.
According to reports, Russia has announced a decision to reduce crude oil export charges to US$87.2 per ton starting from October 1. That said, Russia is encouraging oil producers to expand exports.
When it took several weeks for Saudi Arabia's two major facilities to restore oil production capacity, Russia expanded exports. It was obvious that it saw an opportunity to fill the gap while trying to seize more oil market share.
| What impact will it have on China?
But having said that, if Saudi Arabia’s oil production capacity is halved, what impact will it have on China?
In the ranking of China’s oil importing countries, Saudi Arabia has always been in the top three. Before 2016, Saudi Arabia was China's largest oil supplier, with nearly 70% of the country's oil exported to Asia. Although Russia replaced Saudi Arabia and occupied the position of China's largest oil supplier for three years after 2016, in June this year, Saudi Arabia's oil supply to China reached a record 7.72 million tons, a year-on-year increase of 84.1%, successfully overtaking Russia, and once again Become China's largest oil supplier.
However, analysts believe that Saudi Arabia’s oil production capacity will be halved, and the impact on China will be limited.
Director of the Petroleum Research Institute of China Petroleum Economic and Technology Research Institute Dai Jiaquan said: "If Saudi Arabia's oil facilities are interrupted for more than a month, we can make up for the gap in Saudi Arabia by temporarily suspending refined oil exports."
To talk about the impact, China National Petroleum Corporation It is believed that the main reason is that Saudi Arabia's production capacity has been halved, which will cause international oil prices to surge, thereby pushing up domestic refined oil prices. Li Yan, an oil product analyst at Longzhong Information , believes that China’s refined oil prices will be affected by emergencies in Saudi Arabia. He said that the international oil prices included in the refined oil price calculation formula announced by the China Development and Reform Commission have now risen significantly.
html On September 18, domestic refined oil prices will undergo their 19th adjustment this year. At present, there is a high probability of another increase.Source: China Petroleum Network
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