Unipec, the trading arm of Chinese state oil major Sinopec and China's largest buyer of U.S. crude oil until recently, is set to resume purchases from the United States "very soon," and volumes are likely to be significant, a senior Unipec executive told S&P Global Platts on Friday.
At the height of the summer and the U.S.-China tariff spat, Unipec suspended crude oil imports from the United States in August and hasn't booked cargoes at least until October, said sources familiar with the plans of the trading unit of Asia's biggest refiner Sinopec.
Although crude oil is not on China's tariff list, Chinese buyers have been staying away from U.S. crude oil purchases since the summer, when the trade war escalated.
According to EIA data, the United States didn't export any crude oil to China in August and in September, compared to 384,000 bpd in July and a record-high 510,000 bpd in June.
After the United States and China called a trade-war truce in early December and pledged to immediately begin trade negotiations in view of possible deal within 90 days, Chinese refiners started to look for opportunities to buy U.S. crude oil by March 1, when the negotiating period expires.
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"China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries," the White House said after the meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the G-20 summit earlier this month.
According to traders and refinery executives who spoke to S&P Global Platts, China's state-held refiners are currently waiting for more guidance from Beijing before restarting U.S. crude imports and are cautious because of the narrow 90-day truce window, but are willing to explore opportunities.
The narrow window and the long voyage between the U.S. Gulf Coast and China are setting a race against time for Chinese refiners who would be buying U.S. crude until March 1, so they have indicated to Chinese authorities that they need further assurances that no cargoes would be left stranded with possible tariffs on crude oil on them, according to Platts.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More