As inflation increases across the supply chain, Asian oil refiners are getting morechoosy about where they get their crude from.

Sources with knowledge of the matter said that Saudi Aramco will supply full contract volumes of oil in September. When an exporter allocates the full amount of a contract, traders think it's in line with demand A cut in the allocation would show a decline in demand, while an increase would show an improvement.

The oil price has fallen below $100 a barrel and is close to the multi-year highs of March.

This is the second month in a row that the full amount has been given to its North Asian customers, which include China.

The data showed that Russia's oil exports to China and India were 30% below their wartime peak.

Ed Moya, senior analyst at OANDA said in response to Saudi Aramco allocating the full amount of crude that demand is clearly weakened due to widespread inflation.

Saudi Arabia raised prices for Asian buyers to near record highs for August deliveries, reflecting some of the squeeze on supply as producers everywhere rush to fill any gaps left by a drop off in Russian exports after Western sanctions

Lower margins for products such as gasoline, diesel and jet fuel are making them morechoosy about where they get their crude. According to reports this week, Asian buyers are buying cheap US crude as traditional Middle Eastern blends are starting to look a bit more expensive.

Roughly double what they bought the previous month, South Korea and India have purchased 16 million barrels of US crude this month.

After Russia invaded Ukraine, countries like China and India took advantage of cheap Russian exports that had fallen out of favor with Europeans. This has raised the price of Russia's oil and buyers are once again looking for a better deal.

Saudi Arabia is on track to reach its highest level of total exports since April 2020 due to a surge in China's oil imports. With restrictions back in place, it is taking a toll on crude demand.

The outlook for China is a big driver of Asian crude demand.

China is the largest energy buyer and its imports make up 10% of total demand. Analysts said that the cost-conscious refiners aren't so keen to get barrels off the global market.

Emma Li, chief market analyst at Vortexa said in a recent report that "China's crude flows have picked up since Q2 as Chinese refineries are drawing crude from other provinces instead of buying it from the international market."

Other factors could be in the mix according to the analyst. Saudi Aramco has the ability to supply more crude now and selling more at higher prices is profitable for them.