Chinese refiners are not buying more U.S. oil despite the three-month truce agreed by Presidents trump and Xi last month, Reuters reports, citing cargo loading plans of Chinese downstream operators.
According the Reuters, Chinese demand for U.S. crude has been dampened by political uncertainty around the trade war and, more directly, by relatively high costs of transportation. this means that despite the truce and future positive developments in bilateral talks on trade, U.S. oil will have yet to become a major element of China’s imported crude oil mix.
One Chinese analyst told Reuters that price was the
top consideration of buyers and the price of U.S. oil simply wasn’t competitive.
“Chinese companies have little incentive to buy
U.S. crude due to the wide availability of crude supplies today from Iran
and Russia,” Seng Yick tee from consultancy SIA Energy said. Yet trade tensions
are not helping, either. With the constant threat of more tariffs,
refiners are reluctant to change their buying habits.
“Even though the trade tension between China
and the U.S. had been defused recently, the executives from the national
oil companies hesitate to procure U.S. crude unless they are told to do
so.”
U.S. crude oil exports hit a high of 23.95 million
barrels in October 2017, data from the Energy Information Administration
shows, but have since then declined, reaching 2.17 million barrels in September
this year before Chinese refiners completely stopped buying U.S. crude in October.
Yet China’s total oil imports in October, on the
other hand, hit 40.80 million tons (9.61 million bpd), of which teapots
imported 8.22 million tons. this was the highest monthly oil import
amount on record, according to customs data from Beijing. the increase
came despite depressed refining margins that could have motivated lower
appetite for crude but apparently did not. the independent refiners
drove the increase as they sought to fulfill their import quotas until
year-end.