Chinese refiners may have been relieved by Beijing’s decision to remove U.S. crude oil from the list of goods in the latest tariff tit-for-tat with the United States, 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. According to Thomson Reuters Eikon ship tracking data, since the beginning of August, not a single tanker loaded with crude oil has departed from the United States en route to China. This compares with average Chinese imports of crude oil around 300,000 bpd June and July. China has, in recent years, become a key export market for growing U.S. energy exports. China is currently America’s second-largest crude oil customer after Canada. Chinese imports of U.S. crude oil in May, for example, averaged 427,000 bpd, more than any other destination and surpassing Canada’s 289,000 bpd imports, EIA data shows. Although China removed U.S. crude oil from the list of US$16 billion worth of American goods on which it slapped 25-percent tariffs last week, traders and potential buyers are in a ‘wait-and-see’ mode before making decisions on placing orders for new U.S. crude oil purchases, fearing that China could still use crude as a bargaining chip in the trade war and possibly slap tariffs on it if the dispute were to escalate further.Related: Crude-By-Rail Could Save The Permian Boom “Since it takes months to get U.S. crude [to China] ... this [not buying U.S. shipments] is a precautionary measure to avoid any distressed selling in case the government puts tariffs on U.S. crude oil,” Sushant Gupta, research director at Wood Mackenzie, told Reuters. Earlier this month, Unipec, the trading arm of Chinese state oil major Sinopec, was reported to have suspended imports of crude oil from the United States, due to the rising trade tension. “We have received our August WTI delivery and will not take any US cargoes in coming months, while Unipec has not offered us any US crude either,” an executive from a Sinopec refinery in central China told Platts earlier this week. By Tsvetana Paraskova for Oilprice.com More Top Reads From Oilprice.com:
Chinese importers are avoiding buying US crude oil as the trade war between the two countries continues and the possibility of escalation remains. Importers are reportedly anxious that Beijing may go back on its decision to exclude the commodity from its tariffs list and fear placing orders, given that it takes months to receive shipments of US crude, according to Sushant Gupta of Wood Mackenzie. Since the start of August, no Chinese tanker has loaded oil from the US, in stark contrast to the 300,000 barrels that were loaded every day in June and July.