THE first round of Chinese sanctions to hit US oil were received with a whimper, and traders are speculating that the move is unlikely to rattle American exports of crude.
After China hit crude purchases from the US with 10 per cent retaliatory tariffs, the futures market took an initial dip – but most of those losses have already been recovered. The reason for the lacklustre response is that US oil exports to China have recently taken a backseat to other buyers that are snapping up more barrels.
Last year, China imported close to 180,000 barrels of US oil a day, accounting for less than 5 per cent of America’s total oil exports. The volume can be easily absorbed by other refiners in Europe and Asia, including South Korea and Japan, according to traders. South Korea is already the second-largest buyer of US crude, taking close to half a million barrels a day.
US exports to China, which peaked at roughly 450,000 barrels a day in 2020, have fizzled as the Asian country struggles to revive its economy and as its shift to electric vehicles dims demand for motor fuels.
China’s importers have also turned to other suppliers. Preliminary data shows that China took 40 per cent less US crude in 2024 while ramping up purchases from Russia and Iran before the latest round of sanctions disrupted flows. As China seeks to continue to replace US oil, it may tap into supplies from places such as the Middle East, Brazil and Guyana.
The Chinese tariffs enter into effect on Feb 10. After Trump gave a last-minute reprieve on levies to both Canada and Mexico, though, President Xi Jinping may seek negotiations as well. BLOOMBERG
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