• 4 minutes China's Economy and Subsequent Energy Demand To Decelerate Sharply Through 2024
  • 7 minutes Beijing Must Face Reality That Taiwan is Independent
  • 11 minutes Phase One trade deal, for China it is all about technology war
  • 14 minutes Shale Oil Fiasco
  • 17 mins We're freezing! Isn't it great? The carbon tax must be working!
  • 9 mins Trump has changed into a World Leader
  • 2 hours Which emissions are worse?: Cows vs. Keystone Pipeline
  • 1 hour Boris Johnson taken decision about 5G Huawei ban by delay (fait accompli method)
  • 12 hours What's the Endgame Here?
  • 7 hours Indonesia Stands Up to China. Will Japan Help?
  • 3 hours Might be Time for NG Producers to Find New Career
  • 12 hours Turkey Muscles-In on Israel-Greece-Cyprus EastMed Gas Pipeline Deal. Erdogan Still Dreaming of Ottoman Empire II.
  • 6 hours Prototype Haliade X 12MW turbine starts operating in Rotterdam
  • 19 hours Trump capitulated
  • 19 hours US Shale: Technology
  • 20 hours Gravity is a scam!
Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

China Willing To Pay More For Crude As Trade War Bites

China’s imposition of tariffs on U.S. crude oil signals its willingness to suffer more pain in the trade war than analysts may have expected. That’s according to a Bank of America analyst who spoke to CNBC.

“They’re hurting themselves on the domestic front by making it more difficult for domestic refineries to make money. They’re hurting themselves on the international front by making their refineries less competitive,” said BofA’s head of commodities and derivatives research, Francisco Blanch.

Blanch's remarks refer to wide expectations for greater demand for light sweet crude, which is the primary sort of crude the United States produces and exports. These expectations are related to the new sulphur emissions rules the International maritime Organization will put into effect from next January.

According to Blanch, the new IMO rules will “create a pretty big premium on light sweet grades which are mostly coming out of the U.S. these days.” 

A quick check with actual figures, however, reveals that the United States is not even in the top five suppliers to China. As of end-2018, Russia was the largest one, followed by Saudi Arabia—which this year has overtaken Russia as number one—Angola, Iraq, and Oman. The situation has changed this year, and not for the better for U.S. producers: Chinese buyers have been keeping their intake of U.S. oil to a minimum as the trade war continues.

Indeed, Blanch acknowledges that China is not a huge buyer of U.S. crude right now, with the average for the first half of the year at 120,000 bpd, most of which shipped during the first quarter, before the trade talks situation deteriorated.

He offered a parallel with soy beans: because of the tariffs, China switched from U.S. to Brazilian—and also Russian—soy beans, with the Brazilian commodity more expensive than the U.S. equivalent.

“We are skeptical that this is going to get resolved,” the analyst said. “And part of it is that China’s pain threshold is high.”

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage




Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News