To meet electricity needs during the scorching summer, Saudi Arabia increased its imports of the dirtiest type of oil to the highest level in more than three years.
Heating oil shipments rose in June to their highest level since at least late 2020 and are expected to remain high this month, according to data from market researchers Kpler and Vortexa. Purchases, which typically surge in the hottest months when air conditioning cranks up, have risen as much as fourfold since March, to about 350,000 barrels a day, according to Vortexa.
Saudi Arabia is the region’s largest consumer of fuel oil, a dirty product left over when refineries make fuels such as gasoline and diesel. The country also burns crude oil directly to generate electricity, which has likely contributed to the kingdom’s exports falling to levels that 10-month lowof about 5.6 million barrels a day in June, according to data compiled by Bloomberg. Heating oil is usually sold cheaper than crude oil because it is heavier and more harmful to the environment.
Temperatures in Riyadh were Mid 40 °C this week, according to AccuWeather, and can above 50 °C (122 °F) in summer. The heat drives up the demand for electricity for air conditioning, which in turn forces the kingdom to burn more oil.
Saudi Aramcowhich handles oil deliveries for the kingdom, declined to comment on heating oil imports.
Time to stop
Saudi Arabia plans to stop burning liquid fuels to generate electricity this decade and aims to achieve net zero emissions by 2060. Crown Prince Mohammed bin Salman, who is pursuing a rapid modernization program, has promised to increase solar and wind Power generation. State-owned oil producer Saudi Aramco signed contracts worth $25 billion last month to extract natural gas from the Jafurah field, which will be used in power plants, among other things.
The company plans to produce enough gas to replace all liquid fuel in power plants by 2030. This could free up about a million barrels of crude oil per day used domestically during the summer months for export.
Saudi Arabia buys most of the fuel oil produced by Iraq and Bahrain, and also imports cargoes from the United Arab Emirates. In April, the kingdom resumed purchases from Russia after a five-month hiatus. Shipments from there have almost doubled since then, but are still below last summer’s levels.
Total heating oil imports are expected to remain high again in July, with both Kpler and Vortexa already expecting purchases of around 300,000 barrels per day this month.
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