Six ships, carrying about 12 MMbbl of U.S. crude, are headed to China just as Beijing prepares to impose its first ever levy on American oil next month.
While the cargoes could be diverted, the shipments highlight the growing demand for U.S. crude in Asia even as tensions escalate between the world’s two biggest economies. China, briefly a top buyer of American oil, has scaled back shipments since the trade war began.
Now, in a counter move to the Trump Administration’s latest round of tariffs, Beijing plans to tax a host of American goods including crude oil starting September 1. That would make crude from the Permian Basin about $3/bbl more expensive to Chinese buyers, rendering it less attractive.
The six ships, scheduled to dock in China through October, could be rerouted and the cargoes resold for better value. U.S. oil that is sometimes shipped to the Chinese market from transshipment zones in Malaysia and Singapore or the Caribbean also could get directed elsewhere.