Saudi Arabia has increased its imports of fuel oil, to the highest level in the last three years, to be able to meet the demand for electricity during the hot summer, reports Bloomberg.
Data provided by research firms Kpler and Vortexa show that in June, Saudi Arabia’s fuel oil imports reached their highest level since the end of 2020 and are expected to remain at a high level in July as well. Purchases of fuel oil, which normally rise during the hottest months of the year as air conditioners run at full capacity, have nearly quadrupled since March to about 350,000 barrels a day, according to Vortex.
Saudi Arabia is the biggest buyer of fuel oil, a dirty product that remains after refineries produce fuels such as gasoline and diesel, from the Gulf region. In addition, Saudi Arabia also burns crude oil to produce electricity, which most likely contributed to the decline in the kingdom’s oil exports to 5.6 million barrels per day in June, the lowest level in 10 months. Fuel oil is sold at a lower price than crude oil because it is heavier and more polluting, according to Agerpres.
According to AccuWeather, the temperatures in Riyadh this week have been around 45 degrees Celsius and during the summer they can exceed 50 degrees Celsius. The heat wave leads to an increase in the demand for electricity to power air conditioners, which forces the kingdom to burn more oil.
Saudi Arabia has set a goal of ceasing to produce electricity based on liquid fuels by the end of the decade, and aims to reach net zero emissions by 2060. Crown Prince Mohammed Bin Salman is pursuing a modernization program and has promised that electricity production from renewable sources will increase.
Last month, state oil group Aramco signed contracts worth $25 billion to pump natural gas from the Jafurah oil field to be used, including in gas-fired power plants. In addition, the company plans to supply enough natural gas to replace all of the liquid fuel used by the kingdom’s power plants in 2030, freeing up roughly one million barrels of crude oil per day for export.
Saudi Arabia’s fuel oil imports should remain at a high level in July as well, with the companies Kpler and Vortexa forecasting purchases of approximately 300,000 barrels per day during this month.