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China’s Sinopec could import over 10 million tons of U.S. crude this year, equivalent to a daily rate of over 200,800 barrels. This would constitute an 80-percent annual increase and could help close a trade balance gap between the two countries that has been annoying President Trump considerably, the South China Morning Post notes.
Last year, Sinopec bought 5.57 million tons of U.S. crude, which accounted for about a tenth of China’s overall oil imports. After the lifting of the export ban in 2015, U.S. crude and oil product exports to Asia’s and the world’s biggest consumer really took off, hitting a high of 16.05 million barrels last November.
This January, U.S. crude oil exports to China hit another high, at 400,000 bpd, according to Thomson Reuters Eikon shipping data. The value of this oil was about US$1 billion. The United States already pumps more oil than Saudi Arabia and could overtake Russia by the end of the year. As a result, the U.S. could also overtake Russia and Saudi Arabia as supplier to China in yet another unprecedented development on the global oil market.
Yet bilateral relations remain a bit strained, especially after last month, when Washington imposed a 30-percent tariff on China-made solar panels in a bid to deter what President Trump calls “unfair” trade practices. Now there’s talk about tariffs and import quotas for aluminum and steel products, which is equally likely to strain China-U.S. relations. It is also doubtful to what extent it would narrow the trade deficit of the U.S. with China, which is a major cause for concern in Washington.
Last year, this trade deficit expanded by 8.6 percent on an annual basis to US$275.8 billion. Yet this January, thanks to record-high oil shipments, the monthly deficit narrowed from US$25.55 billion in December, to US$21.895 billion. Chinese buyers are pragmatic and if WTI keeps its nice discount to Brent and Middle Eastern grades, they will keep on buying, tariffs or no tariffs.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.