{"id":116449,"date":"2020-07-05T20:52:08","date_gmt":"2020-07-05T17:52:08","guid":{"rendered":"https:\/\/www.enerjigazetesi.ist\/?p=116449"},"modified":"2020-07-05T20:57:48","modified_gmt":"2020-07-05T17:57:48","slug":"rusya-ve-suudi-arabistanin-cin-ile-olan-petrol-iliskisi-ve-dunyaya-etkileri","status":"publish","type":"post","link":"https:\/\/www.enerjigazetesi.ist\/en\/rusya-ve-suudi-arabistanin-cin-ile-olan-petrol-iliskisi-ve-dunyaya-etkileri\/","title":{"rendered":"How Russian and Saudi Oil Ties to China"},"content":{"rendered":"

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Russia and Saudi Arabia both rely on oil sales to fund a majority of their budgets. In the last five plus years, China has become the\u00a0biggest customer\u00a0for both countries. In fact, China is the\u00a0world\u2019s largest importer of oil, though it could cut imports if it stopped adding to inventory (storage). China has stored so much oil over that half a decade, that it could practically halt all oil imports and get by just fine for a while. In other words, Vladimir Putin and Muhammed bin Salman need to stay in the good graces of Xi Jinping. This has global consequences, including for the United States.<\/h1>\n

Only Chinese authorities know for sure how much oil<\/strong> it has in inventory,\u00a0but there are a range of estimates.\u00a0Reuters\u00a0<\/strong>estimated last year that China had 788 million barrels<\/strong> in its strategic petroleum reserve<\/strong>. That number did not include the large commercial reserves, even though nothing is truly beyond the reach of the government in a nominally communist country.\u00a0WoodMac\u00a0<\/strong>said in \"\"<\/strong>March of this year that China could reach 1.15 billion barrels<\/strong> of total inventory in 2020<\/strong>, that would mean almost four months\u2019 worth of oil if China cut all imports<\/strong> and domestic production<\/strong>.<\/p>\n

Let\u2019s examine what might happen if China threatens to cut all imports from just one of those countries and does not replace that oil with imports from<\/strong> somewhere else. It would drop the global demand\u00a0by\u00a0a little under two\u00a0million<\/strong>\u00a0barrels per day immediately. China<\/strong> could make up for this cut in imports by drawing from inventory. This would send shockwaves through<\/strong> the speculative oil market. Oil prices<\/strong> would fall. That country whose oil was cut<\/strong>\u2014whether it is Russia<\/strong> or Saudi Arabia<\/strong>\u2014would be desperate to find new buyers and may have to undercut the market with low prices, thus further dropping oil prices<\/strong>. Therefore, the exporter<\/strong> that China targeted<\/strong> would suffer, but so would all oil producers, including United States<\/strong> firms. Yet, Russia<\/strong> and Saudi Arabia<\/strong> have the most to lose if China<\/strong> is upset with them.<\/p>\n

China<\/strong> could do less harm, but still harm, by simply choosing to stop growing<\/strong> its own inventory. It produces about\u00a04.9 million barrels<\/strong>\u00a0of oil per day domestically<\/strong>. It could choose to only import what it needs for its economy. If it stops importing for inventory\u00a0that could be<\/strong> about a 1 million barrel<\/strong> per day demand cut, according to this 2018<\/strong> report from\u00a0S&P Global Platts<\/strong>. That alone would be a pain\u2014though likely a manageable pain<\/strong>\u2014for global oil producers<\/strong>. If the cut came directly from either Russia or China, it would be a serious pain for that country.<\/p>\n

The point of all of this<\/strong> is that when it comes to oil, Russia<\/strong> and Saudi Arabia<\/strong> are beholden to China. They need sales to China<\/strong>, but thanks to China\u2019s inventory, China does not really need purchases from both of them. On the global stage<\/strong>, it would be hard for Russia<\/strong> or Saudi Arabia<\/strong> to take sides on any issue against China. That could prove significant<\/strong> in the near future as the U.S.<\/strong> and others delve into the\u00a0origins of the coronavirus\u00a0<\/strong>pandemic and as China<\/strong> and India continue<\/strong> their recent\u00a0border face-off.<\/strong><\/p>","protected":false},"excerpt":{"rendered":"

Russia and Saudi Arabia both rely on oil sales to fund a majority of their budgets. In the last five plus years, China has become the\u00a0biggest customer\u00a0for both countries. In fact, China is the\u00a0world\u2019s largest importer of oil, though it could cut imports if it stopped adding to inventory (storage). China has stored so much […]<\/p>\n","protected":false},"author":1,"featured_media":116452,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[53,44],"tags":[1198,21779,42501,886,42491,52379,52259,75146,75142,69340,67259,75150,75151,42493,75152,75147,75149,43125,75148,5004,75143,53153,347,7649,14922,21298,6524,1376,75144,2623,32663,885,75153,46544,42453,75145,1463,43801],"views":119,"_links":{"self":[{"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/posts\/116449"}],"collection":[{"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/comments?post=116449"}],"version-history":[{"count":3,"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/posts\/116449\/revisions"}],"predecessor-version":[{"id":116453,"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/posts\/116449\/revisions\/116453"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/media\/116452"}],"wp:attachment":[{"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/media?parent=116449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/categories?post=116449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enerjigazetesi.ist\/en\/wp-json\/wp\/v2\/tags?post=116449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}