Oil Daily | Saudi Arabia Cuts Prices to Boost October Crude Shipments to China and Regain Market Share

【Latest Oil Policies】

The Canadian federal government is considering lifting an emissions cap on the oil industry, contingent on alternative emission reduction strategies. This proposal requires Alberta's government to make a similar commitment. This emissions cap was criticized by the oil industry as potentially stifling growth, though it could be replaced by a new "climate competitiveness strategy" later this year.

President Donald Trump has urged the G7 countries to impose tariffs on China and India for trading with Russia, suggesting it would hasten the end of the Ukraine war. The European Union favors sanctions over tariffs, citing legal and market stability concerns. The EU is also contemplating moving up its timeline to phase out Russian energy imports.

The European Union remains committed to phasing out Russian oil and gas imports by January 1, 2028, despite U.S. calls for an accelerated timeline. The EU is preparing legislation to prevent new short-term contracts with Russian suppliers, aiming to replace Russian energy with U.S. and Qatari LNG and domestic renewables.

【Industry News】

Tanker markets saw a significant recovery in August, with Suezmax rates rising 34% month-on-month, and VLCC rates increasing by 19%. The spike is attributed to geopolitical factors and changes in trade flows. In contrast, clean tankers, which transport refined products, experienced softening rates due to refinery overcapacity and low margins.

OPEC maintained its global oil demand growth forecast at 1.3 million bpd for 2025, with non-OECD economies driving demand. OPEC production increased by over 500,000 bpd in August, yet the rise is seen more symbolic due to actual production lagging behind quotas.

【Company News】

Australia has approved the North West Shelf Project Extension, allowing its largest LNG plant to operate until 2070. Woodside will work to reduce emissions annually, aiming for net zero by 2050. The extension offers operational certainty and the potential for increased domestic gas supply.

Saudi Arabia plans to restore its crude shipments to China to August levels after reducing its prices for October. Aramco aims to ship 51 million barrels (1.65 million bpd) to China in October, matching the high levels in August. The price cuts are part of a strategy to regain market share in Asia.

Iraq and Oman have agreed on a preliminary plan to build an oil pipeline from Iraq to Oman to diversify export routes. The first phase involves constructing storage tanks in Oman. This initiative aligns with Iraq's strategy to increase its oil production capacity significantly by 2029.

Russia's crude and petroleum product export revenues fell by $920 million in August, attributed to wider discounts on Russian crude and reduced refinery production due to drone attacks. Export revenues are near five-year lows, affecting Russia's economic stability.

Aramco has encouraged Asian buyers to increase their purchases of Saudi crude in October after cutting prices. The adjustment follows the recent increase in September's pricing, reflecting strong demand expectations in Asia. The strategy aims to boost market share in the region.