In June, China brought in 49.9 million tons of crude oil. Russia supplied 8.35 million tons, while Saudi Arabia provided 7.9 million tons. Imports from Russia dipped a bit compared to the previous month, but imports from Saudi Arabia jumped by 45%. Malaysia’s contributions also rose by 40%, totaling 7.1 million tons, or about 1.73 million barrels per day. This made Malaysia China’s third-largest oil supplier.

Malaysia As A Transshipment Hub

The increase in exports from Malaysia relates to its role as a transshipment hub for oil from Iran and Venezuela, two countries under sanctions. Official figures show that China did not import oil from these nations in June, and there were no imports from the US due to high tariffs. In the first half of the year, China’s oil imports from Russia were down 11% compared to last year, but Russia still held the top supplier spot. Saudi Arabia came in second, with Malaysia close behind. Saudi imports fell by 3.5% year-on-year, while imports from Malaysia increased by over 30%. This highlights Iran’s growing significance as an oil supplier to China amid US sanctions. We believe that official crude import numbers may oversimplify the oil market situation. A key point is the rising impact of unofficial, sanctioned oil supplies reaching the world’s largest importer. This so-called “shadow supply” adds complexity that official agencies like the IEA or EIA may not fully capture. Shipments from one Southeast Asian country are the most critical data to note. These flows, widely recognized as a conduit for Iranian crude, have reportedly reached around 1.5 million barrels per day based on recent tanker tracking data. This consistent, discounted oil supply helps keep oil prices stable, limiting potential price increases from cuts in other production areas.

Market Competition And Pricing Strategies

At the same time, competition between Moscow and Riyadh for market share in Asia is intensifying. Recently, Riyadh lowered its Official Selling Price (OSP) for its Arab Light crude to Asian buyers for October delivery, showcasing this competitive pressure. This price war between the two largest conventional suppliers adds to a well-supplied Asian market. However, demand remains uncertain. China’s recovery from the pandemic has been mixed, but the recent Caixin Manufacturing PMI for August unexpectedly rose to 51.0, suggesting a surprising boost in factory activity. This indicates that underlying demand for commodities might be more robust than it seems, creating a delicate balance. Looking ahead, we see a period of high volatility rather than a clear trend. The market finds itself between complex, less visible supply sources and signs of steady, if unpredictable, demand. Thus, strategies that benefit from price fluctuations, like buying straddles on Brent or WTI futures, seem wiser than taking outright long or short positions in the coming weeks. Create your live VT Markets account and start trading now.

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