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Three U.S. crude oil cargoes are currently headed to China in what could be the first Chinese purchase of American crude since the trade war escalated last summer and since the ‘trade-war truce’ of three months began in December, Reuters reported on Tuesday, quoting ship brokers and tanker-tracking data.
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 of 2018, when the trade war escalated.
According to EIA data, the United States didn’t export any crude oil to China in August, September, and October, 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 are said to have started to look for opportunities to buy U.S. crude oil until March 1, when the negotiating period expires.
According to ship brokers who spoke to Reuters and to Refinitiv Eikon vessel tracking data, three cargoes left Galveston, Texas, in December and are currently heading to China. One tanker is expected to arrive in China late in January and two others are planned to arrive in late February or early March, although the final destinations could change.
Related: Oil Rises After Choppy Start To The Week
As of mid-December, cargo loading plans of Chinese refiners showed that appetite for U.S. crude in China continued to be weak, despite the trade-war truce. Rising freight costs for U.S. crude and the uncertainty over how the U.S.-China trade negations would unfold were the top considerations of the buyers, a Chinese analyst told Reuters last month.
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 in mid-December.
China may have shunned U.S. crude oil since the summer, but the U.S. boosted shipments to other destinations. EIA data shows that American crude oil exports in October—the latest available monthly data—set a record high of 2.326 million bpd.
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.