Saudi Arabia imported fuel oil from Kuwait for the first time in over two years this July to help meet the peak summer power demand, as discounted supplies from Russia decreased, according to trade sources and shipping data.
Imports of Kuwaiti high sulphur fuel oil (HSFO) surpassed 180,000 metric tons (about 37,000 barrels per day), marking the kingdom’s first fuel purchase from Kuwait since May 2022, data from shipping analytics firms Kpler and Vortexa revealed.
This increased demand from Saudi Arabia is keeping more Kuwaiti supply within the Middle East, thereby supporting benchmark prices in Singapore despite a general decline in Middle Eastern exports.
The trade flow is expected to continue into August, as Aramco Trading recently secured a tender for 130,000 tons of very low sulphur fuel oil (VLSFO) from Kuwait’s Al Zour refinery, according to trade sources.
The cargo, scheduled for loading on August 11-12, was traded at a discount of about $8 to Singapore VLSFO quotes on a free-on-board Kuwait basis, the sources added.
While Russian supplies still constitute the bulk of Saudi Arabia’s fuel oil imports—amounting to approximately 441,000 tons in July, which is about 30% of total volumes—they have decreased from nearly 750,000 tons in the same month last year.
In June 2023, Saudi Arabia imported record volumes of discounted Russian fuel oil to meet summer demand while exporting its own production at higher prices.
Competition from China and India for Russian HSFO has led Saudi Arabia to seek alternative suppliers, such as Kuwait, according to Emril Jamil, a senior analyst at LSEG Oil Research.
Aramco declined to comment, and the Saudi government communications office did not immediately respond to a request for comment. Additionally, Kuwait Petroleum Corporation (KPC) and its subsidiary Kuwait Integrated Petroleum Industries Company (KIPIC) did not immediately respond to a request for comment.
FGE’s Middle East oil analyst Palash Jain noted that refinery maintenance at the SASREF refinery from April to June may have also limited Saudi Arabia’s ability to increase fuel oil stocks ahead of the summer.
Kuwait, which has surplus HSFO to export as its power plants switched to burning LSFO last year, has been able to meet this demand.
