(Bloomberg) -- China is willing to expand oil trade with Saudi Arabia, President Xi Jinping said during a visit to the kingdom that reinforced ties between the world’s No. 2 economy and its top supplier of crude.
In 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 is set to meet more Arab leaders on Friday.
The summit comes as ties between the US and Saudi Arabia have frayed over oil policy.
China will seek to strengthen coordination with Saudi Arabia on energy policy and exploration, a statement from the Chinese foreign ministry said. Saudi Arabia, along with Russia, is the de facto leader of OPEC+, a producers’ cartel that pumps roughly half the world’s oil.
Saudi Arabia’s daily exports of crude to China have averaged 1.65 million barrels this year, according to data compiled by Bloomberg. That’s worth around $130 million at today’s prices.
The two countries “reaffirmed the importance of stabilizing the oil market.”
Saudi state-owned energy firm Saudi Aramco said it would collaborate on refining and petrochemical projects with Shandong Energy Group.
Shandong is a hub for China’s independent refiners. Shandong Energy is among companies looking to start up a huge, 20-million-ton-a-year refining complex. Any deal may allow Aramco to win more market share in China.
There was no mention of the idea that Saudi Arabia may accept yuan payments for oil instead of the dollar, as was suggested earlier this year. Diplomats and analysts said at the time the reports should be seen as a political message to the US, rather a strong signal of the kingdom’s plans, partly because the Saudi riyal is pegged to the dollar to shield it from volatility.
The two nations signed a slew of investment pacts, though details were scant. 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.
EXPLAINER: Understanding the Ups and Downs of US-Saudi Relations
Xi and Prince Mohammed “reviewed aspects of partnership and joint coordination efforts,” the state-run Saudi Press Agency said. Xinhua said Xi agreed to help boost Chinese tourism to the Middle Eastern nation and expand cultural links.
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 allying with Russia on oil production cuts, vowing 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 moved to seal off Huawei from the US market for telecoms equipment.
--With assistance from Anthony Di Paola, Salma El Wardany and Sarah Chen.
(Updates with announcements on oil market, petrochemical projects.)
©2022 Bloomberg L.P.
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