Chinese leader Xi Jinping and Saudi crown prince Mohammed Bin Salman met this week in Riyadh to discuss oil trade and other issues.
On December 9, the leaders of Saudi Arabia and China met in Riyadh — Xi Jinping’s first visit there since 2016. He and his counterpart, Crown Prince Mohammed bin Salman , agreed to meet more often and signed a number of agreements broadly aimed at aligning countries’ medium-term development agendas, China’s Belt and Road Initiative and Saudi Arabia’s Vision 2030.
In heart of China-Saudi relations is oil. No specific oil deal was revealed during the meeting, but the Riyadh meeting was clearly an opportunity for the countries to cement their longstanding energy trading relationship. Saudi Arabia is China’s top oil supplier and China is its biggest oil customer, importing 43.9 billion USD Saudi crude oil in 2021.
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Now, however, there’s a bear in the room: Russia.
In normal times, Russia and OPEC countries like Saudi Arabia share an interest in oil, sharing intentions against the US and Canada. When US President Joe Biden to visit Saudi Arabia in June To push OPEC to increase oil production, Saudi Arabia chose instead to keep production steady. That has strengthened Russia’s hand, at a time when its oil exports are increasingly sanctioned because of the war it is pursuing in Ukraine; Saudi Arabia’s decision makes it harder for other countries to refuse Russian oil. Unsurprisingly, it also soured US-Saudi relations.
Russia and OPEC are competing for business in China
But in the case of China, Saudi Arabia and Russia are more at odds. Before invading Ukraine, Russia sold most of its oil to Europe. The current That market is closed. China has become Russia’s top oil customer and was able to deep discount out of Russian suppliers, who have little choice but to accept. The alternative would be to cut off one of the Kremlin’s most important sources of income.
“For now, all the levers are on China,” said Paddy Ryan, assistant director for European energy security at the Atlantic Council, a Washington-based think tank. because Russia doesn’t have that many options.
The Russian price cut “could cause a bit of tension with OPEC, if .” said Ryan [Russia’s low prices] are pushing back the Saudis and the UAE.” Although OPEC has picked up some of its Russian business in Europe, that market is much smaller than China, and European policymakers are working harder than ever to roll out vehicles. electricity and otherwise exclude their countries from oil regardless of origin: “The EU is not really a market you want to trade for India and China,” Ryan said.
Xi’s visit to Saudi Arabia and the agreements signed there show that China sees cheap Russian oil as an opportunistic utility, and Saudi oil as one. safer long-term bet. That will worry Russian manufacturers, which are unlikely to regain the European market anytime soon.
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