In July, Saudi Arabia imported fuel oil from Kuwait for the first time in over two years to help meet peak summer power demand, as discounted supplies from Russia declined, according to trade sources and shipping data.
The imports of Kuwaiti high sulfur fuel oil (HSFO) surpassed 180,000 metric tons (approximately 37,000 barrels per day), marking the kingdom’s first purchase from Kuwait since May 2022, as reported by shipping analytics firms Kpler and Vortexa.
The strong demand from Saudi Arabia is keeping more Kuwaiti supply in the Middle East, which has supported benchmark prices in Singapore amid an overall decrease in Middle Eastern exports.
This trade flow is expected to continue into August, with Aramco Trading recently winning a tender for 130,000 tons of very low sulfur fuel oil (VLSFO) from Kuwait’s Al Zour refinery. The cargo is scheduled to load on August 11-12 and was traded at a discount of about $8 to Singapore VLSFO quotes on a free-on-board Kuwait basis.
While Russian supplies still represent the majority of Saudi Arabia’s fuel oil imports—reaching about 441,000 tons in July and accounting for roughly 30% of total volumes—this figure has 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.
However, increased competition from China and India for Russian HSFO has prompted Saudi Arabia to seek alternative suppliers like Kuwait, according to Emril Jamil, a senior analyst at LSEG Oil Research. Aramco declined to comment on the matter, and the Saudi government communications office did not respond to requests for comment. Likewise, Kuwait Petroleum Corporation (KPC) and its subsidiary, KIPIC, did not provide immediate comments.
Palash Jain, an oil analyst at FGE, noted that refinery maintenance at the SASREF refinery from April to June may have also constrained the kingdom’s ability to boost fuel oil stocks ahead of summer. He added that Kuwait has surplus HSFO available for export as its power plants have switched to burning low sulfur fuel oil (LSFO) since last year.
