Iran Energy News Oil, Gas, Petrochemical and Energy Field Specialized Channel
Related Articles
China`sthreat to impose duties on U.S. oil imports will hit a business that has soared in the last two years. and which is now worth almost $1 billion per month. In an escalating spat over the United States` trade deficit with most of its major trading partners. including China. U.S. President Donald Trump said last week he was pushing ahead with hefty tariffs on $50 billion of Chinese imports. starting on July 6. China said Friday it would retaliate by slapping duties on several American commodities. including oil.
Investors expect the spat to come at the expense of U.S. oil firms. pulling down the share prices of ExxonMobil and Chevron by 1 to 2 percent since Friday. while U.S. crude oil prices fell by around 5 percent.
`This escalation of the trade war is dangerous for oil prices.` said Stephen Innes. head of trading for Asia Pacific at futures brokerage OANDA in Singapore.
The dispute between the United States and China comes at a pivotal time for oil markets. The potential drop-off in American oil exports to China would benefit other producers. especially from OPEC and Russia. The OPEC kingpin Saudi Arabia and Russia indicated on Friday they would loosen their supply restraint and were starting to raise exports. A cut in Chinese purchases of U.S. oil may also benefit Iran`s sales. which Washington is trying to curb with new sanctions it announced in May.
`The Chinese may just replace some of the American oil with Iranian crude.` said John Driscoll. director of consultancy JTD Energy Services.
China`s aggressive riposte to Trump took some in the industry by surprise.
U.S. crude exports to China have been rising sharply. thanks to a production surge in the past three years that was a welcome alternative to make up for the cut in supplies from OPEC and Russia.
`We`re caught by surprise that crude oil is on the list.` said an official with a Chinese state oil major. asking not to be named as he was not authorized to speak to media.
U.S. oil exports. which have been surging thanks to a sharp increase in production in the past three years. were seen as a viable alternative to make up for the cut in supplies from OPEC and Russia. Shipping data in Thomson Reuters Eikon shows that U.S. crude oil shipments to China have soared in value recently. jumping from just $100 million per month in early 2017 to almost $1 billion per month currently. The threatened tariff would make U.S. oil more expensive versus supplies from other regions. including the Middle East and Russia. and likely disrupt a business that has soared recently.
