U.S. Oil Exports to China Set to Stop Amid Tariff War | OilPrice.com
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Breaking News:
China has been buying lower volumes of U.S. crude oil so far this year, and its purchases are set to stop amid the escalating tariff and trade war between the world’s two biggest economies, analysts say.
So far this year, American crude oil has accounted for only about 1% of the imports of China, the world’s top crude importer. But the tariff war that U.S. President Donald Trump launched against China in early February dissuaded the remaining Chinese buyers from buying U.S. crude oil.
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The latest tariff escalation – a 125% U.S. tariff on Chinese goods and an 84% Chinese tariff on American goods – makes the price of U.S. oil in China nearly double compared to what it was last year, for example.
“With China imposing 84% tariffs on goods from the US, the cost of US crude would be almost double — $51 a barrel more expensive, based on $61 WTI,” Ivan Mathews, head of APAC analysis for energy flows analytics firm Vortexa, told Bloomberg.
“This makes running US crude uneconomical for Chinese refiners,” Mathews added.
Analysts expect China’s imports of U.S. crude to stop due to the heightened trade tensions.
China could now buy more volumes from the Middle East, especially after Saudi Arabia slashed the price of its crude loading for Asia for May to a multi-year low level over the Dubai/Oman benchmarks.
China is also reselling LNG cargoes originated from the United States.
The trade war is prompting China’s LNG buyers to resell the cargoes they are buying from the U.S. as Chinese tariffs on American goods are raising the costs of U.S. LNG imports, analysts and traders have told Reuters.
The trade war and the new tariffs on U.S. LNG are driving major Chinese LNG buyers to stop imports from the United States and resell the cargoes they have already bought or contracted, according to multiple sources who spoke to Reuters.
By Tsvetana Paraskova for Oilprice.com
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