An independent Chinese refiner has suspended crude oil purchases from the United States and has now turned to Iran as one of its sources of crude, media reports, citing an official from the refiner, Dongming Petrochemical Group.
What’s more, the source said that Beijing is planning to slap tariffs on U.S. crude oil imports and replace them with West African and Middle Eastern crude, including crude from Iran. China has already said that it will not comply with U.S. sanctions against Iran and it seems to be the only country for now in a position to do this.
U.S. crude oil exports to China reached 400,000 bpd at the beginning of this month, but now Beijing is planning to impose a 25-percent tariff on these as part of its retaliation for Trump’s latest round of tariffs on US$34 billion worth of Chinese goods. The retaliation began with tariffs on 545 U.S. goods worth another US$34 billion, but, Reuters reports, the oil tariffs will be announced at a later date.
Energy analysts seem to believe that these oil tariffs are more or less a certainty, and now expect a reshuffle of crude oil imports to Asia. With China turning to Iran for its crude, U.S. oil could start flowing in greater amounts to another leading importer in the region, South Korea. Related: Big Oil’s Next Major Move
“If China retaliates with tariffs on U.S. crude, that could improve South Korea’s terms of buying U.S. crude...because the U.S. would need a market to sell to,” on analyst, from the Korea Energy Economic Institute.
Meanwhile, South Korea’s embassy in Iran this weekend rejected media reports that the country had suspended oil purchases from Iran under pressure from the United States. The country is the third-biggest buyer of Iranian crude in Asia, buying Iranian crude at an average daily rate of almost 300,000 barrels since March this year.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- The Critical Chokepoint That Could Send Oil To $250
- Mexico Likely To Keep Making The World’s Biggest Oil Hedge
- Thermal Coal Prices Are Soaring