Investors are levying strong critiques…
Oil analysts appear to be…
China is likely to stop the import of US crude, as 5% tariffs on such crude will be put into place starting from September 1, 2019 and the country has no difficulties meeting its current oil demand.
China announced last Friday additional tariffs of 5%-10% on 75 billion dollar worth of American goods, effective from September 1 and December 15, following the US announcement of more tariffs on Chinese goods. American crude is among the first batch of goods to bear the additional tariffs.
The 5% tariffs will probably turn Chinese refiners away from US crude when the tariffs on crude from other countries are zero.
Earlier in August 2018, Chinese refiners suspended the imports of US crude as they worried about possible tariffs amid mounting trade tensions. They resumed the purchase of US crude in the first quarter of 2019 as both countries pushed forward with their trade talks, but imports dropped significantly from 2018.
China took 17% of total US crude exports in 2018, just behind the biggest buyer, Canada which received 19% of US shipments. The Chinese market share dropped to 7% in the first half of 2019, according to data from the US Department of Commerce.
Related: Canadian Oil Prices Jump On Crucial Pipeline Breakthrough
For the US, China is a big buyer of its crude and could become an even bigger one if it wasn’t for the trade war. As China stops importing its crude, the US will probably have to find more buyers for its still increasing oil production, but finding another market the size of China could prove challenging.
From a Chinese perspective, the US is not one of its largest crude suppliers yet. Cargoes from the US did surge by 88.9% in 2018 and accounted for about 4% of China’s crude imports last year, but this was mostly a result of China’s efforts to balance the trade surplus with the US.
China will have no trouble securing sufficient crude supply from elsewhere since it has moved to diversify its crude imports in recent years. The country is boosting crude imports from Russia, the Middle East and Africa which are likely to remain the three leading crude suppliers to China in the foreseeable future.
By JLC International
More Top Reads From Oilprice.com:
JLC with headquarters located in Beijing, and branch offices in Shanghai, Shandong, Guangzhou and Singapore, is a leading provider of market intelligence and pricing solutions…