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Saudi Arabia ready for oil war with Russia
Over the past three months, Russia has become the largest exporter of oil to China, ahead of Saudi Arabia. Riyadh responded by lowering official oil prices for Asia. The kingdom is ready for an oil war with Russia in the Asian market. In May, Russia surpassed Saudi Arabia, which was China's largest crude oil supplier, according to customs data released in late June. For the third month in a row, the world's largest oil producer outpaced the world's largest oil exporter in terms of shipments to China, Reuters reported.
In May, China imported 5.245 million tons of oil, or about 1.24 million barrels per day, from Russia, breaking the previous record of 1.17 million barrels per day in April. Oil imports from Saudi Arabia reached 961 thousand barrels per day in May, up from one million barrels per day in April. Both Russia and Saudi Arabia consider China to be a priority oil market. However, independent Chinese refiners prefer low-sulfur crude oil from Russia due to lower shipments and geographic proximity to refineries.
High sulfur oils from Saudi Arabia and Iraq are less suitable for China due to the large volume of cargo and long-term contracts. China is encouraging cooperation with Russia by speeding up the granting of import licenses and quotas for independent refiners, American Thinker, a daily online publication, reported. “Russian oil remains a priority for Chinese companies, as their throughput requires the fast delivery that Russian companies are able to offer,” explained a senior Chinese trader.
Meanwhile, Saudi Arabia announced that it is cutting official oil prices for its Asian and American buyers. “Saudi Arabia’s decision to lower the official oil price will increase competition with countries such as Russia and the United Arab Emirates, which produce similar grades of oil and are also trying to gain a large market share in Asia, the number one oil import region,” Asharq A-Awsat reports.
It is difficult to say whether the new price will affect the further decline in Saudi Arabia's revenues, but the kingdom is seeking to increase its market share in Asia and compete directly with Russia, according to American Thinker. “Saudi Arabia responded with increased oil production following intensive development of the field. This move, according to traders, could put pressure on competing manufacturers such as the United Arab Emirates and Russia and lower prices in Asia,” the newspaper writes.
In a word, Riyadh will not surrender its positions to Russia in the Asian market without a fight. Saudi Arabia has traditionally dominated the Asian market and will respond to new challenges.
Saudi Arabia is ready to participate in the creation of the Asian Infrastructure Investment Bank. This was stated by the Minister of Finance and National Economy of Saudi Arabia Ibrahim al-Assaf.
For 13 consecutive years, Saudi Arabia has been China's largest trading partner among Arab countries. At the end of 2014, trade between Saudi Arabia and China reached $ 70 billion.
Earlier, the UK sent a letter to the PRC authorities in which it declares its intention to become the founding country of the Asian Infrastructure Investment Bank. The Chinese authorities welcomed the decision of the British side. China is chairing the meeting of the main negotiating representatives from the founding countries of the bank. The UK is expected to become a founding member at the end of March 2015.
Now 27 countries have expressed their desire to become co-founders of the Asian Infrastructure Investment Bank. Recall that following the meeting of the finance ministers of the countries of the Asia-Pacific Economic Cooperation (APEC) in the fall of 2014, the "Roadmap for the implementation of public-private partnerships in infrastructure in the APEC space" was adopted. China will allocate $ 5 million for this purpose. In the APEC regions, there is a need for the construction of infrastructure facilities, which is difficult to meet due to limited funding opportunities. And the solution to this problem will be public-private partnership in the implementation of such projects.
China's Finance Ministry said Saudi Arabia and Tajikistan will join the other 24 founding countries of the Asian Infrastructure Investment Bank, which is backed by Beijing.
The Chinese ministry said in a statement posted on its website that the number of founding countries of the bank, whose capital reaches US $ 50 billion, has increased to 26 after Saudi Arabia and Tajikistan joined the project. It is also stated that the rest of the founding countries have given their consent to the entry of new members.
The establishment of the bank was announced in Shanghai in October last year, but its opening has been postponed. Analysts say the US views the new international bank as a dangerous competitor to the Western-controlled World Bank and Asian Development Bank, as its emergence could weaken US strategic influence in the region.
A number of the most important countries of the Asia-Pacific region, incl. Australia and South Korea refused to participate in the creation of a bank focused on providing loans to developing countries and financing projects. The largest participant in the bank will be China, whose share will be about 50%.
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