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China Finds Oil In Asia’s Deepest Onshore Well

China Finds Oil In Asia’s Deepest Onshore Well

China National Petroleum Corporation (CNPC)…

Chinese Oil Buyers Resell Cargoes Of US Oil To Avoid Tariffs

Oil tanker

Chinese oil buyers are reselling cargoes of U.S. crude oil that were set to arrive in China after Beijing slapped a 5-percent tariff on U.S. crude on September 1—and India and South Korea are buying.  

India’s state-held Bharat Petroleum Corporation Limited (BPCL) has already bought one or two cargoes of U.S. crude that were initially en route to China but later diverted away, BPCL’s Director of Refineries R. Ramachandran told Bloomberg in an interview. The Indian firm could buy more oil originating from the United States that was en route to China, he added.

China announced on August 23 that it would be imposing tariffs on US$75 billion worth of U.S. goods, including crude oil, in two batches beginning September 1 and December 15.  

For a year now, Chinese buyers have been reluctant to buy U.S. crude oil, fearing that tariffs may come any moment, disrupting their plans and making the imported oil more expensive. Many of those who have continued to buy oil from America have been hedging risks by having the option of alternative port destinations of the cargoes. 

Those buyers’ fears have now come true. The 5-percent tariff on crude oil—effective on September 1—caught several tankers carrying U.S. crude oil en route to China.  

Related: Russia Favored For Half-Trillion Dollar Iranian Oil Project

According to Bloomberg estimates, six tankers carrying a total of 12 million barrels of U.S. oil were headed to China at the time when Beijing announced it would impose tariffs on U.S. crude. One of those made the voyage to China before the September 1 deadline, while another is believed to have offloaded the cargo at a port before the tariff kicked in, ship-tracking data compiled by Bloomberg shows.

Unipec, the trading unit of Asia’s and China’s largest refiner Sinopec, is reselling some of the U.S. cargoes that it has bought to customers in South Korea and India—an “unusual move” directly stemming from the Chinese tariff on U.S. crude, Reuters reported on Thursday, citing three sources familiar with the matter.  

While China is avoiding imports of U.S. crude due to the newly imposed tariff, India and South Korea—deprived of Iranian oil due to the U.S. sanctions on Tehran—are buying more American oil. Total U.S. oil exports to the Asian region are not expected to drop because of the Chinese tariff. Some analysts, like ESAI Energy, expect U.S. exports of crude oil to Asia to grow from 1.2 million bpd in the first half of 2019 to about 1.3 million bpd for the balance of 2019, despite China’s tariff.

By Tsvetana Paraskova for Oilprice.com

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