The Aug Brent futures contract has seen a rangebound morning, trading between $81.30/bbl and $81.80/bbl, and is currently trading at $81.46/bbl at the time of writing (11:15 BST). Headlines reveal that Saudi oil shipments to Chinese buyers are expected to total around 36mbbls in July, down from 39mbbls in June and 45mbbls in May. This decline is attributed to refinery maintenance and the availability of cheaper alternatives to Saudi crude and comes after Saudi Arabia announced a $0.50/bbl per barrel reduction in its official selling price for Asia for July deliveries, suggesting a focus on maintaining market share despite falling international benchmarks following the latest OPEC+ meeting. Historically, Saudi Arabia has been China’s largest oil supplier, only overtaken by Russia last year; In 2023, Russia shipped 107.02 million metric tons of crude to China, a 24% increase from 2022, while Saudi Arabia exported 85.96 million tons, a 2% decline from the previous year. Meanwhile, Chinese hydropower output has surged this year due to heavy rains following a severe drought two years ago. Hydropower generation increased by 8.4% in the first four months of the year, boosting the stocks of hydropower companies, most notably Yangtze Power Co., the country’s largest dam operator, is on track to reach a market capitalization of $100 billion. The front and 6-month Brent Futures spreads are at $0.40/bbl and $2.53/bbl, respectively.
