FINWIRES · TerminalLIVE
FINWIRES

Market Chatter: Saudi Crude Exports to China to Slump in June

By

Saudi Arabia's crude oil exports to China are expected to drop between 13 million and 14 million barrels in June compared with pre-war levels of 40 mmbbls to 50 mmbbls, due to high prices and as geopolitical conflict in the Middle East persists, Bloomberg reported Monday, citing sources.

A sharp decline is also expected in May, to around 20mmbbls, the article said.

Saudi Aramco's official selling prices for June came in higher than spot prices for other Middle Eastern grades such as Murban and Oman crude, traders told the news agency.

Cargoes will be reportedly loaded at the Yanbu port on the Red Sea given that using the Strait of Hormuz is not an option.

On Sunday, Saudi Aramco said in its Q1 earnings report that it has diverted crude oil exports to the west coast and "sharply ramped up" its East-West pipeline to a maximum capacity of 7 mmbbls/d to manage flow disruptions.

Saudi Aramco did not immediately respond to' request for comment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Related Articles

Oil & Energy

Crude Benchmarks Post Weekly Slump Amid Hormuz Escalation, Peace Deal Doubts

Global oil benchmarks ended the week in negative territory on Friday, as a volatile mix of military escalation in the Strait of Hormuz and tentative hopes for a diplomatic breakthrough kept markets on edge.West Texas Intermediate settled at $94.68/bbl, down from $102.50/bbl the previous week, while Brent closed at $100.14/bbl, compared with $109.20/bbl a week earlier.WTI registered a weekly loss of 6.4%, while Brent declined 7.42%.Despite late-week price spikes driven by renewed fire exchanges, both benchmarks still ended the week lower, weighed down by earlier optimism that a 14-point US-Iran peace memorandum could eventually reopen global shipping lanes.The week began with the US military launching "Project Freedom" to escort commercial vessels through the blockaded Strait of Hormuz.This move triggered immediate Iranian missile and drone strikes against UAE infrastructure and transit vessels, with Tehran claiming the operation violated restricted zones.The Strait of Hormuz remains effectively closed, with renewed clashes between US and Iranian forces reducing the prospect of a near-term reopening, Saxo Bank strategists said.On Friday, the UAE Defense Ministry said Friday its air defenses engaged two ballistic missiles and three drones launched from Iran, the third time this week that it has fired on the UAE.While the US subsequently drafted a UN Security Council resolution to safeguard navigation, President Donald Trump's mid-week announcement of "great progress" on a peace deal briefly calmed the market.Prices retreated as Washington paused its escort missions to allow Tehran time to review a one-page memorandum of understanding intended to end the conflict.However, sentiment was later challenged by a tightening supply picture in the US.The Energy Information Administration reported a 2.3-million-barrel drawdown in US crude inventories, bringing stocks to 457.2 mmbbls.Market analysts noted that US refineries are increasingly reliant on domestic stocks to offset the prolonged disruption to Middle Eastern supply, pushing US crude exports to 4.75 million barrels per day.Volatility surged again by Thursday after reports emerged of Iranian missiles targeting US Navy vessels and explosions near Bandar Abbas.The escalation followed a US Treasury move to sanction Iraq's deputy oil minister for allegedly helping Iran bypass embargoes.While these flashes of conflict forced prices higher in the final sessions, they were insufficient to erase the cumulative losses of a week defined by the market's search for a diplomatic floor.Saxo analysts added that the International Energy Agency has pegged regional supply losses at about 14 million barrels per day, "only partly offset by surging US exports, strategic reserve releases and demand destruction."Weekly US oil product exports hit a record high, according to EIA data.US exports of total petroleum products hit a record 8.2 mmb/d in the week ending May 1, the highest level since the Energy Information Administration started reporting the product export data in February 1991.The weekly figure is up from 7.7 mmb/d a week ago, according to the EIA.Total weekly US crude oil and petroleum products exports stood at 12.97 mmb/d, down from 14.18 mmb/d a week prior, driven by a sharp drop in crude exports, EIA data showed.Weekly crude exports were at 4.8 mmb/d, down from 6.4 mmb/d the previous week.Meanwhile, the US oil rig count rose by two from 408 the previous week to 410 in the week ending May 8, according to data from Baker Hughes (BKR) released Friday. That compares with 467 oil rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by two to 672 from 670 the previous week.Money managers in the WTI crude futures and options markets maintained their net long positions in the week ended May 5, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released on Friday.The data showed that money managers reported 214,039 long positions, down 5,611 from April 28, while short positions were down 2,066 to 82,083.

$BKR
Oil & Energy

Weekly US Natural Gas Slips on Mixed Fundamentals Despite Below-Forecast Storage Injection

US natural gas markets edged lower over the week, despite below-forecast net storage injections and colder-than-normal weather across most of the country in recent days, amid conflicting demand indicators.The front-month June contract price fell over the week to $2.75 per million British thermal units from $2.79/MMBtu on April 24.However, the front-month June contract price rose by $0.08 over the week to $2.730 per million British thermal units, from $2.647/MMBtu on May 1, according to the US Energy Information Administration's Weekly Gas Storage Supplement released on Thursday.Natural gas spot prices rose by $0.15/MMBtu to $2.75/MMBtu during the week ended May 6, according to the EIA, from $2.60/MMBtu the prior week.On the demand side, cooler-than-normal temperatures across the country limited both heating and cooling demand, with total US natural gas demand dropping by 0.7 billion cubic feet per day, driven by a 1.2 Bcf per day decline in power sector consumption, according to LSEG data.Additionally, LNG feedgas averaged 17.4 Bcf/d throughout the past week, down 7% from the prior week, EIA said, citing LSEG data. This comes amid planned maintenance across several major terminals.Natural gas prices rose across most regional hubs, barring Waha, where prices declined $1.07/MMBtu over the past week, according to the EIA.The net injection into storage for the week ended May 1 was 63 Bcf, down from 79 Bcf the prior week, bringing total gas inventories to 2,205 Bcf, according to EIA data. This week's figures were also below forecasts at 72 Bcf, prompting a market rally, according to data compiled by Investing.com.During the same week last year, the EIA reported a net injection of 104 Bcf, with the five-year average for this period at 77 Bcf.Total gas inventories at 2,205 Bcf are now 75 Bcf, or 4% above the corresponding period a year ago, and 139 Bcf, or 7%, higher than the five-year average for this period.Nearly all regions reported a net injection of working gas for the week ended May 1, with the East injecting the most, up 29 Bcf from the prior week, with total inventories at 361 Bcf, which is just 1 Bcf, or 0.3% below its five-year average for this period.The EIA reported that storage levels across the Pacific, Mountain and the South Central Non-salt regions were all above their respective five-year averages, while the rest were still at a deficit.According to Pinebrooke Energy Advisors, this week's storage report marked the "tightest storage build" since early April, based on population-weighted temperatures, and 2024 and 2025 weekly changes.Additionally, the US gas rig count dropped by one from 130 the previous week to 129 in the week ending May 8, according to data from Baker Hughes (BKR) released Friday. That compares with 108 gas rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by two to 672 from 670 the previous week.Weather forecasts had pointed to below-normal temperatures for early and mid-May, however, almost the whole of the country is now expected to see above-normal temperatures from May 15 to May 21, according to the National Weather Service, which could add to cooling demand.A total of 30 liquefied natural gas-carrying vessels left US ports during the week, down by five, compared to 35 vessels last week, with a total capacity of 115 Bcf, down by 18 Bcf compared to the prior week.In international markets, European TTF gas prices averaged $15.85/MMBtu for the week ended May 6, $0.44/MMBtu higher than the previous week.The Japan-Korea Marker averaged $16.90/MMBtu, about $0.31/MMBtu higher than the prior week.

$BKR
Oil & Energy

Hormuz Disruption Erases Almost 13 Million b/d of Gulf Supply, Oxford Institute Says

The Strait of Hormuz disruption has removed nearly 13 million barrels per day of Gulf supply while tightening global fuel markets and increasing volatility, the Oxford Institute for Energy Studies said in a Friday note.According to the institute, the disruption quickly evolved from a shipping interruption into a broader production shock as crude and refined product flows through Hormuz nearly stopped."The SOH disruption is first and foremost a flow shock of unprecedent magnitude," the institute said, adding that the crisis exposed the strait's critical role for both crude and refined fuel exports.OIES said the outage has also become a refinery and products crisis, as Gulf Cooperation Council refinery runs dropped sharply, while Asian refiners reduced throughput due to crude shortages and higher feedstock costs.OIES said global oil market buffers remain limited because spare production capacity sits largely within the same disrupted Gulf region, while commercial inventories and strategic reserves continue drawing down rapidly.US export growth, sanctioned crude waivers and oil-on-water offered temporary relief, but they cannot replace missing Gulf crude and fuel supplies if disruptions persist.Despite strategic petroleum reserve releases, OECD crude inventories and US gasoline and distillate stocks have continued falling, while China remains relatively better protected through larger crude reserves and storage capacity despite weaker Middle East imports.The physical supply disruption has also spread into financial markets, where oil price volatility reached record levels and liquidity conditions weakened sharply across major futures contracts, especially Gulf benchmarks.Despite limited direct exposure to Hormuz crude flows and rising exports to Asia, the US still faces higher gasoline and diesel prices from global oil market pressures, while shale output growth remains muted.Higher prices, fuel rationing and supply shortages are already pressuring oil demand, while inventory rebuilding after flows resume could later support consumption, OIES said.A quicker recovery, weaker economic activity or deeper demand losses could pressure oil prices lower, while supply disruptions, infrastructure damage and geopolitical risks may keep volatility and prices elevated, OIES said.Depleted inventories, tighter supply conditions and a more fragmented geopolitical environment could weaken the oil market's long-term resilience while keeping upside price risks elevated for longer.