• 3 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 5 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 6 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 7 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
Alt Text

Russia Goes All In On Arctic Oil Development

Fighting sanctions and low oil…

Alt Text

Draw In Crude Inventories Lifts Oil Prices

Oil prices reversed course on…

Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

Trade Wars Or New Oil Markets – Trump’s Asian Dilemma

Trade Wars Or New Oil Markets – Trump’s Asian Dilemma

President Donald Trump has been vocal in referring to China as an unfair rival to the U.S. on global markets. The media has been only too happy to report on every anti-China utterance; talk about a trade war, threats of levying hefty import taxes—all this has been a windfall for news outlets. But Trump has not yet made good on his threats. Will he ever? And what about other Asian economies, which also have a trade surplus with the U.S.?

China’s trade surplus with the U.S. is around US$350 billion, according to data from the International Monetary Fund as graphed by Bloomberg. The other countries in the region run a much lower surplus with the U.S., but that doesn’t mean they will stay out of Trump’s attention.

However, it would be pessimistic to expect a trade war with any of these countries, even China. After all, President Xi Jinping has already warned Trump that a trade war would have dire consequences for both sides. As would any trade war, with any country in the region.

There is another reason why Trump may have already decided – or may well decide eventually – that trade wars will get him nowhere. It’s a simple reason: Asian economies are the drivers of fossil fuel consumption, and the U.S. is an export hopeful.

Energy independence is high on Trump’s agenda. He has been making good on his promise to help the industry by signing several executive orders to that effect, greenlighting the Dakota Access and the Keystone Xl pipeline projects, and – his first law – removing the transparency rule for Big Oil. Related: Total Going On The Offensive

Yet he must have been made aware that the U.S. must keep importing at least some crude, regardless of how much domestic output grows. Refineries need both light and heavy blends, and U.S. oil is light. On the other hand, the decades-long veto on crude oil exports has been lifted, and there’s a whole global market out there—the Asian part of it hungry for oil and likely to become hungrier as it grows.

Already, U.S. energy companies are eyeing Asian markets – they received substantial, although unintended, help in this from OPEC, after the cartel agreed to cut production to support prices. This agreement meant they would have to cut their exports as well, clearing the way for U.S. exports.

For now, U.S. crude is going mostly to Canada and Europe, but this is about to change in all likelihood. Japan – also on the list of surplus-running Asian economies – is among the biggest consumers of crude oil and petroleum products, and one of the biggest importers. That’s an obvious market for more U.S. oil, especially since Trump doesn’t seem to hold any grudges against the current government there.

India is tipped as the next China in terms of oil demand. Trump and Modi have a friendly relationship, despite the U.S. trade deficit with the Asian nation. Everyone in oil is eyeing India as the biggest growth market for their products. There is no reason why U.S. oil should be any different. Related: Are Oil Markets Ignoring Demand?

South Korea is another major consumer of crude, most of it imported, some of it from the U.S. In fact, according to Platts, “South Korean buyers have been among the friendliest buyers reaching out to U.S. producers, since the U.S. lifted an effective ban on exports at the end of 2015.”

What’s more, one of Trump’s closest friends in the energy industry, Harold Hamm of Continental Resources, told Platts that South Korea is a top export destination for the company.

In this context, when some Asian economies can relatively quickly turn into major export destinations for U.S. oil, trade wars are unlikely to take place. If U.S. shale boomers manage to cut their breakeven prices even further and take advantage of the current oversupply of tankers – the result of newbuilds coming on stream and old vessels idled because of the OPEC production cut – they could take a bite out of OPEC’s Asian markets.

By Irina Slav for Oilprice.com




Back to homepage


Leave a comment

Leave a comment




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