Unipec, the trading arm of China and Asia’s biggest refiner Sinopec, plans to resume imports of U.S. crude oil during the 90-day trade truce window, as the tentative halt to additional tariffs and lower oil prices are making American oil attractive again, Reutersreported on Wednesday, quoting three sources in the know.
Although crude oil is not on China’s tariff list, Chinese buyers have been staying away from U.S. crude oil purchases since the summer, when the trade war escalated.
According to EIA data, the United States didn’t export any crude oil to China in August and in September, compared to 384,000 bpd in July and a record-high 510,000 bpd in June.
After the United States and China called a truce on the trade war this weekend and pledged to immediately begin trade negotiations in view of possible deal within 90 days, Chinese refiners are now willing to buy U.S. crude oil by March 1, when the negotiating period expires.
“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” the White House said after this weekend’s meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
Chinese buyers will rush to buy U.S. oil to have it docked in China before March 1, a senior executive at Sinopec told Reuters, noting that “Oil prices are low, so it makes economic sense to store some crude as commercial inventories.”
According to traders and refinery executives who spoke to S&P Global Platts, China’s state-held refiners are currently waiting for more guidance from Beijing before restarting U.S. crude imports and are cautious because of the narrow 90-day truce window, but are willing to explore opportunities.
Despite the narrow window, China may encourage its state-owned refiners to boost imports of U.S. oil in order to show sincerity after the trade war truce, a Beijing-based crude oil trader told Platts.
By Tsvetana Paraskova for Oilprice.com