Saudi Oil

Saudi oil shipments declining for U.S. and increasing for China.

Since 2002, Saudi oil shipments to the U.S. have been declining while shipments have been increasing to China. Indeed, last year Saudi Arabia was China's leading source of oil imports.

China's position as the second-largest oil consumer after the United States. While China is trying to diversify its energy import supplies, it still depends on the Middle East for half of its oil imports, with Saudi Arabia and Iran providing approximately 30 percent of China's oil imports.China has secured numerous energy exploration agreements with the Saudi government. For example, Sinopec has won the right to explore for natural gas in Saudi Arabia's al-Khali Basin, while Saudi Arabia has agreed to assist China in the development of its strategic petroleum reserves and upgrade China's downstream refinery capacity as demonstrated by the construction of a refinery for natural gas in Fujian Province.

China has signed a US$100bn deal with Iran to import 10 million tons of liquefied natural gas over a 25-year period in exchange for a Chinese stake of 50 percent in the development of the Yahavaran oil field in Iran. China has also expressed a desire in direct pipeline access to Iran via Kazakhstan.

Chinese companies have been the subject of numerous sanctions for the transfer of ballistic missile technologies to Iran. Since the mid-1980s, China has sold Iran anti-ship cruise missiles such as the Silkworm (HY-2), the C-801, and the C-802.
China has attempted to maintain good relations with the Arab world in order to get their support on the Uighur insurgency in Xinjiang Province and maintain amicable relations with the 55 million Muslims residing in China

While China has maintained a historically close relationship with the Arab world, including sympathizing with the Palestinian cause, it has nevertheless also pursued an increasingly close relationship with Israel in recent years. Israel is one of only a handful of countries that has never granted diplomatic recognition to Taiwan. In recent years, Sino-Israeli relations have been fueled by China's growing dependence on Israel for arms imports and upgrades, particularly hard-to-find U.S.-made weapons platforms. Israel is now China's second largest supplier of weaponry after Russia. Most notably, Israel has sold China "Harpy" anti-radar drones and Python-3 air-to-air missiles.

Nevertheless, there are limits to Sino-Israeli relations given the close relationship between Israel and the United States as evinced by Israel's decision (under U.S. pressure) to cancel the sale of the Phalcon airborne early-warning radar system to China in July 2000 and its decision not to upgrade harpy drones for China in 2004

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