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(Bloomberg) — China is willing to expand oil trade with Saudi Arabia, President Xi Jinping said during a visit to the kingdom that cemented ties between the world’s second-largest economy and its top crude supplier.
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At a meeting in Riyadh on Thursday, Xi and Crown Prince Mohammed bin Salman also agreed to hold summits every two years and upgraded the relationship to a comprehensive strategic partnership, the official Xinhua news agency reported. The Chinese leader will meet with several Arab leaders on Friday.
The summit comes at a time when ties between the US and Saudi Arabia have been strained over oil politics.
China will seek to strengthen coordination with Saudi Arabia in the field of energy policy and research, according to a statement from the Chinese Ministry of Foreign Affairs. Saudi Arabia, along with Russia, is the de facto leader of OPEC+, the producer cartel that pumps roughly half of the world’s oil.
Saudi Arabia’s daily oil exports to China have averaged 1.65 million barrels this year, according to data compiled by Bloomberg. That’s worth about $130 million at today’s prices.
The two countries “reaffirmed the importance of stabilizing the oil market”.
Saudi state energy company Saudi Aramco announced that it will cooperate on refining and petrochemical projects with Shandong Energi Group.
Shandong is a hub for China’s independent refiners. Shandong Energi is among the companies looking to launch a huge 20 million ton-per-year processing complex. Any deal could allow Aramco to gain more market share in China.
There was no mention of the idea that Saudi Arabia could accept paying for oil in yuan instead of dollars, as was suggested earlier this year. Diplomats and analysts said at the time that the reports should be seen as a political message from the US, rather than a strong signal of the kingdom’s plans, in part because the Saudi riyal is pegged to the dollar to protect it from volatility.
The two countries signed a series of investment pacts, although details were scarce. They announced plans to synchronize Xi’s signature Belt and Road infrastructure program with the Kingdom’s Vision 2030, which aims to wean the economy off its reliance on oil.
EXPLANATION: Understanding the ups and downs of US-Saudi relations
Xi and Prince Mohammed “discussed aspects of partnership and joint coordination efforts,” the state-run Saudi Press Agency said. Xinhua said Xi agreed to help boost Chinese tourism in the Middle Eastern nation and expand cultural ties.
The moves show a willingness to strengthen relations just as both countries’ ties with the US cool. In October, President Joe Biden accused Riyadh of colluding with Russia to cut oil production, promising unspecified “consequences.”
The pacts included an agreement with China’s Huawei Technologies Co. on cloud computing and high speed internet complexes in Saudi Arabia. Last month, the Federal Communications Commission decided to exclude Huawei from the US market for telecommunications equipment.
–With assistance from Anthony Di Paola, Salma El Vardani and Sarah Chen.
(Updates with oil market announcements, petrochemical projects.)
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