While it’s unlikely China will…
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China has chartered tankers that could deliver as much as 37 million barrels of crude oil from the United States next month, Bloomberg reports, citing data from the Census Bureau.
This would be a record-high for China, despite the latest escalation between the two, and in accordance with its obligations under the trade deal closed last year.
China committed to buying some $18.5 billion in additional energy supplies from the United States this year and another $33.9 billion next year. The supplies range from crude oil and LNG to coal and oil products. However, the pandemic has shattered the demand that would have helped soak up these supplies, making it a lot harder than before for Beijing to stick to its commitment.
Even before the pandemic, there were doubts that China would be able to buy all the agreed energy supplies. The oil glut and the growing LNG glut were among the reasons as was the comparatively high price for U.S. gas. It is hardly a surprise, especially with the pandemic, that so far this year, China has been slow to buy the agreed volumes.
Interestingly, despite this lag, China’s total oil imports during the first half of the year were higher than the respective period of 2019. These averaged 10.78 million bpd, up by 10 percent on the year, despite the pandemic.
Oil imports from the U.S. also rose, according to a Refinitiv analyst, to as much as 5 million tons, which is equal to more than 1 million bpd – higher on the year but lower than the amounts that were agreed to ship from the U.S. to China this year.
As of June, China had only bought some five 5 percent of that, or $1.29 billion worth of U.S. energy products, including crude oil, LNG, and metallurgical coal.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
China committed to buying some $18.5 billion in additional energy supplies from the United States this year and another $33.9 billion next year. However, China could easily decide to cancel purchases of US energy products if the United States continues to escalate tension with it.
President Trump might think that bashing China might prove a vote winner in the November presidential elections. He might even believe that he can improve his chances of winning a second term in the White House by provoking China through a resumption of the trade war against it and crossing a red line over Taiwan thus forcing it to retaliate.
The risk of provoking China by crossing a red line over Taiwan is, however, highly dangerous because any miscalculation could get out of hand possibly causing a nuclear war.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London