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Trade War ‘Totally Stopped’ U.S. Crude Oil Shipments To China

China oil

The U.S.-China trade war is battering what was a fast-growing business for U.S. oil producers until a few months ago—U.S. crude oil shipments to China have “totally stopped” in recent weeks, the president of China Merchants Energy Shipping Co (CMES) told Reuters on Wednesday.

Since the middle of this year, the U.S. and China have been imposing tariffs on each other’s goods, escalating the row with tit-for-tat tariffs on billions of U.S. dollars worth of goods.

The latest escalation included China slapping a 10-percent tariff on U.S. liquefied natural gas (LNG) last month.

China has so far spared crude oil from tariffs. Chinese refiners may have been relieved by Beijing’s decision to remove U.S. crude oil from the list of goods in the tariff tit-for-tat, but they are staying away from purchases of U.S. crude as refiners and traders fear that the removal is only temporary, and China may slap tariffs on U.S. crude if the trade war further escalates.

“We are one of the major carriers for crude oil from the U.S. to China. Before (the trade war) we had a nice business, but now it’s totally stopped,” CMES president Xie Chunlin told Reuters on the sidelines of a global maritime forum in Hong Kong on Wednesday.

U.S. crude oil exports to China, which only started in 2016 after the U.S. removed restrictions on crude exports, have been rising over the past year to hit a record 510,000 bpd in June 2018, before easing to 384,000 bpd in July, according to the latest available EIA data.

According to Refinitiv Eikon ship tracking data, U.S. crude oil shipments to China plunged in September to just 600,000 barrels in the month, compared to 9.7 million barrels for the month of August.

Meanwhile, China is looking to replace U.S. crude oil because of the trade war, and is buying crude from West Africa at the highest level in seven years, according to Bloomberg data. Chinese refiners have purchased 1.71 million bpd of crude oil from West Africa for October loadings, the highest since at least August 2011 when Bloomberg started to compile the data.

By Tsvetana Paraskova for Oilprice.com

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  • Richard M on October 04 2018 said:
    China exports nearly four times as much to the US as it imports from the US. That's really the bottom line. China can't possibly win a trade war with the US unless the US blinks first. It is now alleged that China is trying to interfere with US elections. That might hurt Republicans but it won't help China. It will just make them mad, resulting in even stronger tariffs and possible sanctions. Meanwhile, manufacturing growth is expected to stay at 10% in China (even without sanctions) but rise to 16% in India. Worsening tariffs with added sanctions could result in negative manufacturing growth for China. Meanwhile, other countries can suck up some of China's market share, and that will lead to more of the same. China has blustered its way past all prior US politicians, but they apparently have run into a brick wall with Trump. The sooner they realize that, the better it will be for them.
  • JEFF M on October 04 2018 said:
    Most everything imported from China that Trump is heavily taxing, can be imported from elsewhere. Many of these trading relationships took years and lots of work and money to develop. Once established, it's hard for others to steal that business. Trump just have US competitors a huge gift. Regarding oil, US producers have been trying to get the rules changed to sell oil elsewhere and that finally got done, a huge upside for the frackers who are pumping like crazy. Now they are screwed.
  • John Brown on October 03 2018 said:
    China has been stealing trillions in intellectual property/technology for decades. Its been waging an unfair trade war on the USA for 30 years. When China was dirty poor that was ok. Now its rich, and became rich with the help of the USA which let them steal and have huge advantages in trade. So its time for it to stop, but China is determined to overtake the USA and it wants to keep stealing, and it wants to keep the advantage of unfair trade, and its leaders have grown so arrogant they think they can order the USA and every other country in the world around. Well China has a trade surplus of over $350 billion a year, and they are about to learn that means they have far more to lose than the USA. We can make iPhones and other products in India, Vietnam, Thailand, Indonesia, Malaysia, Philippines etc. Let make countries friendly to the USA rich and let China see where it can sell the stuff we are buying from them now.
    All China has to do is agree to stop STEALING, and fair trade. Yet they won't. They have become so arrogant they think they can do as they please. They will find out differently. We must support President Trump. Sooner or later China will agree to fair trades. The U.S. was weak, and in decline under Obama who appeased and surrendered to everyone. Trump is standing up for American jobs and higher American wages. Democrat are worthless and corrupt. Support Trump....and lets keep winning and winning.
  • Mamdouh G Salameh on October 03 2018 said:
    Did anyone expect China to turn the other cheek to America? It will retaliate tit for tat against any new US tariffs and US oil shipments are not immune from Chinese tariffs.

    Moreover, China could easily replace US oil shipments by increasing its imports of Iranian light crude oil thus undermining US sanctions.

    President Trump should by now realize the futility of escalating trade war against China. It is a war he can’t win.

    If China was hindered by rising US tariffs from selling $800-billion worth of goods annually in the US, it can sell them somewhere else as its economy is far more integrated than the US economy in the global trade system supported by its silk and belt road initiative.

    The US on the other hand may have to replace Chinese imports with more expensive imports from elsewhere. This will lead to rising costs for US customers, higher inflation, widening budget deficit and rising outstanding debts by at least 2.35%. In other words, the US will be the eventual loser in a full trade war with China.

    Sooner or later, the Trump administration will be forced to cut its losses by bringing to an end its trade war with China.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • cenergy ventures on October 03 2018 said:
    That is the big headline , that China did stop buying 100% of US crude since July or rather into August. June was 500kbpd+ exports to China directly via the SOEs buying it.
    Some data after that from different sources suggests that China is still getting US crude indirectly.

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