Saudis worried as Russia becomes China's biggest oil partner

For a long time Saudi Arabia has far out-done Russia as a major supplier of oil to booming China.

At the beginning of this current decade, the Saudi share of Chinese crude imports was evidently around 20%, while Russia's was below 7%.

But something has changed. The hijack of the US' governance by the Rothschild mafia and their political collaborators and proxies, which resulted in Washington-led aggression by the West and the increasingly obvious pursuit of full spectrum dominance, have naturally driven countries like Russia and China to do the obvious: cooperate closely economically and politically as allies.

This is a powerful alliance. Both countries are in a far stronger position economically than a USA that is sinking under a mountain of debt, far overstretched by the cost of maintaining a military machine it cannot afford and increasingly reliant upon plunder and intimidation to maintain any semblance of viability. By comparison, both Russia's and China's economies are more soundly based on actual production, China's is booming and Russia paid off her international debts in 2006.

To sidestep the West's attempt to control the world by controlling its oil and gas supplies - in part through its vassal state, the Saudi Kingdom - the Eurasian alliance have again begun to do the logical thing, with Russia and China trading oil for goods.

Russia has massive oil resources that are not under the control of the Rothschild mafia, hence the panicky effort to kick-start a war with Russia - a war that the USA no longer has the strength socially or economically to sustain - in the somewhat unrealistic hope of removing the Russian obstacle to the control of oil and gas.

So the Russian share of the lucrative Chinese oil market is on the rise as Russian crude oil exports to China have surged at the expense of the Saudis and the Saudis are getting nervous. Indeed it now looks like Russia has taken pride of place as China's leading oil partner.

RBC Capital Markets' commodity strategist Michael Tran recently wrote:

"Russia is the biggest rival to the Saudis in the single-largest oil demand growth country in the world . . .The rising tide of Chinese growth has meant that notional volumes for both countries have increased in the years since, but Russia's gains have been outsized. . .  The Kingdom now finds itself neck and neck with Moscow for the lead in Chinese market share, with both jostling in the 13-14% range, yet the momentum resides with the latter. . . "

Indeed, the Saudi increase of exports to China has shown a growth rate that was inferior to no less than seven other countries, including South Sudan and Colombia, according to figures cited by Tran. And Russia led the field by increasing its exports by 550 kilobarrels a day in the same period.

Worse news for the Saudis: in December and several other months in 2015, Russia actually overtook the Saudis as the Number One crude oil exporter to China. To put that set-back in perspective, it's worth pointing out that the Saudis had lost the top spot on only two or three occasions in the whole of the past five years. So there is a trend here that has the Saudis very worried indeed.

Part of Russia's success in China has been its ready willingness to accept the new Chinese insistence that exporters accept yuan denominated currency for their oil. This has suited both countries as both are determined to remove the dollar's unfair advantage as the currency of international commerce.

Gao Jian, an analyst at SCI International, a Shandong-based energy consultant, told Bloomberg back in June."Saudi Arabia is losing its crown as its selling prices in Asia haven't been attractive enough,"

Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., told Bloomberg back in June:

"If Saudi Arabia wants to recapture its number one ranking, it needs to accept the renminbi for oil payments instead of just the dollar."

There is something else the Saudis could do - theoretically - to capture more market share in what has become the world's preeminent region for growth in demand for oil and that is to own refineries. This has historically been part of the Saudi strategy in key demand regions and indeed there have been recent reports of Saudi interest in acquiring stakes in Chinese refineries. It is something the Chinese government might not be too keen to allow however while Saudi Arabia remains a vassal state of the US.

On the other hand, China may not be too keen to put all its eggs in the Russia basket: while Russia is an ally now, things change and she could easily become a competitor in the future.

But for now and perhaps the forseeable future, the Russians are shoving the Saudis aside in China and it's making the Saudis sweat.