Saudi Arabia’s crude oil supply to China is expected to rise to about 51 million barrels in August. Saudi Aramco plans to deliver around 1.65 million barrels each day, which is an increase of four million barrels compared to July’s total. This shipment will be the highest level of Saudi crude supply to China in 2023. The data is sourced from unnamed trade sources and Kpler. This update shows a boost in energy trade between the two countries. Saudi oil exports to China are not only recovering but are also reaching record levels for this year. Kpler’s data reveals a clear shift in oil flow, likely driven by refining needs, favorable prices, or availability. The daily supply is up by over 120,000 barrels from July, indicating a significant adjustment. Saudi Aramco’s changes in August shipment plans suggest stronger demand from China or improved refining margins encouraging more purchases from Middle Eastern suppliers. Factors such as OPEC+ discussions, Chinese inventory levels, and global price benchmarks may explain why the oil is being moved at this volume and pace. Trade sources closely track this data, and our assessments of forward curves and freight rates support these observations. Although this increase is based on actual oil movement, it ties into expected market volatility regarding energy benchmarks. Significant shifts in physical supply can disrupt short-term market setups. The options markets have factored in tighter Chinese buying trends over the last three months, and this news impacts not only market sentiment but also hedging strategies. Speculation about whether this change will lead to more inventories or refined product exports from Asia will likely be confirmed in the next reporting period. Traders aligned with geopolitical flows may already be adjusting their positions, particularly those involved in Brent-Dubai arbitrage or refining crack spreads in East Asia. When physical supplies to refiners spike, local profit margins can be squeezed unless offset by increased export demand or price recoveries in diesel and jet fuel. Additionally, this increase comes during a time of tightening market signals and higher shipping costs. Therefore, pricing for some contracts has likely been very favorable, or short-term arbitrage opportunities were utilized in late May or early June. If true, current calendar spreads—especially for later months—could be undervalued. We might see more oil stored in floating storage or teapots reducing production unless product demand keeps up. Looking ahead to August and September, there’s a real chance to focus less on headline news and more on the connection between shipping data and market exposure. Rapid oil movements into key import markets can affect structure and volatility products. If supply continues at this pace without matching reductions, the Brent structure may flatten further. Also, refining margins in Singapore should be monitored closely, especially distillate cracks, which could become overbought if demand fails to match the crude influx. If we view this as the first step in a larger third-quarter restocking or hedging cycle, the coming weeks should reveal repeating patterns in Middle Eastern shipments. Once the direction of supply is clear, market spreads often shift sharply as participants adjust to discrepancies in pricing or inventory expectations.

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