Saudi Arabia Quadruples Fuel Oil Imports to Meet Soaring Summer Power Demand

Saudi Arabia has quadrupled its fuel oil imports to the highest level in over three years to meet soaring power demand during the scorching summer. Fuel oil shipments surged in June and are expected to remain elevated in July, driven by increased air conditioning usage.

Saudi Arabia Quadruples Fuel Oil Imports to Meet Rising Summer Power Demands Amid Scorching Heat

To help meet the power demand during the scorching summer, Saudi Arabia increased its imports of the dirtiest type of crude to the highest level in over three years.

According to market researchers Kpler and Vortexa (via Fortune), fuel oil shipments increased in June to their highest level since at least the conclusion of 2020. They are anticipated to remain elevated this month. Vortexa reports that purchases have increased fourfold since March, reaching approximately 350,000 daily barrels. These purchases typically increase during the warmest months as air conditioners are activated.

Saudi Arabia is the region's primary purchaser of fuel oil, a hazardous substance that remains after refineries have converted it into transportation fuels such as gasoline and diesel. In June, according to Bloomberg data, the kingdom's exports reached a 10-month low of approximately 5.6 million barrels per day, as it also directly consumes crude oil to generate electricity. Fuel oil is typically sold at a lower price than crude oil due to its higher pollution levels and heavier weight.

AccuWeather reported that Riyadh's temperatures were in the mid-40s this week and can reach as high as 50C (122F) during the summer. Because of the heat, the kingdom is compelled to consume more oil, which drives the demand for electricity to power air conditioners.

Saudi Aramco did not address the fuel oil imports responsible for the kingdom's oil shipments.

Saudi Arabia Aims to Replace Liquid Fuels with Natural Gas by 2030 to Meet Net Zero Goal

As part of its objective to achieve net zero emissions by 2060, Saudi Arabia intends to cease the combustion of liquid fuels for electricity this decade. Crown Prince Mohammed bin Salman has committed to increasing Solar and Wind generation as part of his rapid modernization initiative. Last month, Saudi Aramco, the state oil producer, executed contracts worth $25 billion to extract natural gas from the Jafurah field for use in power facilities.

The company intends to replace all liquid fuel in power facilities with gas by 2030, freeing up approximately 1 million barrels of crude used domestically during the summer months for export.

Saudi Arabia imports shipments from the United Arab Emirates and purchases most fuel oil produced in Iraq and Bahrain. After a five-month hiatus, the kingdom resumed purchasing from Russia in April. Although supplies from that region have nearly doubled since then, they remain below the levels of last summer.

Fuel oil imports are anticipated to remain elevated in July, with Kpler and Vortexa anticipating approximately 300,000 barrels per day of purchases thus far this month.