Saudi holds China’s market share lead on record oil output

Bloomberg

Saudi Arabia kept its spot as China’s biggest oil supplier for the first seven months this year after pumping record output in July, even
as Russia threatens to overtake the kingdom in their contest for sales
to the world’s largest energy consumer.
The biggest crude exporter shipped an average of 1.05 million barrels a day to China in the year through July 31, giving it a market share of 14 percent, according to Bloomberg calculations based on data that China’s General Administration of Customs published Wednesday. Russia’s share was 13.6 percent, the data show. Russia has gained ground in China this year, exceeding imports from Saudi Arabia in three months.
“There’s a market-share battle going on mainly among the Middle East producers and Russia,” Olivier Jakob, managing director of Petromatrix, said by phone from Zug, Switzerland. “Rivals are making a big push into China.”
Oil climbed more than 20 percent to enter a bull market last week amid speculation that supplier talks in September in Algiers may lead to action to stabilize the market. The world’s biggest producers are fighting for market share as prices
are still at half the level of two years ago. Saudi Arabia pumped 10.67
million barrels a day on average in July, while Russia’s output was 11.01 million barrels a day, according to the Organization of Petroleum Exporting Countries.
China bought more oil from Russia than from Saudi Arabia from March through May, according to the customs data. For all of last year, Russia’s share was 12.6 percent against Saudi Arabia’s 15.1 percent.
Russia has gained ground on Saudi Arabia, in part, by selling crude on a spot basis to refineries not owned by China’s state oil companies, Jakob said. Those smaller refiners, known as teapots, have been allowed to import their own supplies in the past year. Russia sold 1.02 million barrels a day in the first seven months, the data show.
Saudi Arabia, which has historically sold most of its crude under long-term contracts to large
refiners, may try to sell more oil
on a spot basis to win buyers in Asia, Jakob said. “Spot sales are a way of adapting to the competition,” Jakob said.

Saudi Arabia Said to Target First Dollar Bond After Fed Meeting
Saudi Arabia is planning to sell its first international bond in early
October as the country looks to
plug a budget deficit estimated at about $80 billion this year, according to people with knowledge of
the matter.
The government may hold a roadshow for potential investors in the last week of September and sell at least $10 billion of bonds early the next month, the people said asking not to be identified as the information is private. The timing and size of the deal may change depending on market conditions, the people said, with one of them saying the kingdom wouldn’t be concerned by a potential interest rate increase in the U.S. next month.
Citigroup Inc., HSBC Holdings Plc, and JPMorgan Chase & Co. were hired as global coordinators for the sale, people familiar told Bloomberg in June. Proceeds would be used to help fund an economic transformation plan and plug a shortfall caused by the slump in oil prices, they said, estimated at 13 percent of economic output this year, according to the International Monetary Fund.
Government debt levels will increase to 30pc of economic output by 2020 from 7.7 percent, according to targets set out in the transformation plan released in June. The plunge in crude is driving bond sales across the six-nation Gulf Cooperation Council as governments seek to fill fiscal gaps the IMF said could reach $900 billion by 2021. Saudi Arabia’s Ministry of Finance declined to comment.