Despite bullish fundamentals this week that saw over 8 million barrels shaved off US inventories, shrinking OPEC production in July, a force majeure declaration by Libya, and continuing tensions in the Persian Gulf, oil prices saw the largest daily loss in years on Thursday after President Donald Trump tweeted that his administration would be putting a “small additional tariff of 10%” on the remaining $300 billion of Chinese goods and products coming to the US.
Did US Oil Giants Just Score Big in China?
It’s a brilliant turn of events for Western oil giants: China gets punished for importing Iranian oil in violation of US sanctions, while its own oil production has been in steady decline for years against the backdrop of increasing consumption. It needs to produce more oil, and the answer to that is now to open its upstream exploration to foreign investors for the first time ever.
This will be seen as the one silver lining for oil majors in an environment of ever-intensifying sanctions and tariffs.
China has now officially scrapped its joint venture restrictions. The decision was made earlier this month and went into effect, officially, on July 30th. What it means is that foreign oil and gas companies face no restrictions on ownership that would require them to enter into a JV with a Chinese partner. In other words, they can operate as fully-owned entities. That’s a game-changer.
A couple of decades ago, China could meet…