The ongoing trade tensions between the world’s two super powers, China and the United States, have resulted in the complete freeze of U.S crude oil shipments to China, Reuters reports citing the President of China Merchants Energy Shipping Co (CMES) Xie Chunlin as saying.
Speaking at the the sidelines of the Global Maritime Forum’s Annual Summit in Hong Kong, Xie said that before the trade war the business was blooming, but now the situation has changed drastically.
“We are one of the major carriers for crude oil from the U.S. to China. Before (the trade war) we had a nice business, but now it’s totally stopped,” Reuters cited him as saying.
Even though crude oil was exempted from the tit-for-tat tariffs imposed by the two countries recently, the halting of shipments is direct byproduct of the brewing tensions.
The move is being reported two months after China International United Petroleum & Chemicals Co. (Unipec), a wholly-owned subsidiary of China’s oil major Sinopec, suspended imports of crude oil from the United States amid ongoing trade tensions between the two countries.
The halt was expected to be lifted in October.
It is not clear what might be further implications on oil trade between the two countries, but as tensions get heightened, the tanker market could be impacted heavily.
This is in particular important having in mind that China was responsible for 25 pct of all U.S. seaborne crude oil exports in terms of volumes in 2017, as indicated earlier by BIMCO.
According to Xie, the trade dispute was forcing China to seek soybeans from suppliers other than the United States, mainly from South America.
In mid September, China slapped U.S. with tariffs on USD 60 billion of imported US products as a counter-attack to the latest levies related to USD 200 billion worth of Chinese goods announced by the Trump Administration on September 17.
Chinese tariffs apply to products ranging from liquefied natural gas to certain types of aircraft as well as cocoa powder and frozen vegetables. The tariffs would be set at 5 and 10 percent.
In the 12 months up until June 2018, China was the second largest buyer of US LNG, accounting for 3 mmtpa of US LNG, according to Giles Farrer, research director at Wood Mackenzie. However, as the US-China trade dispute escalated, Chinese buyers have gradually reduced purchases of US LNG.
He explained that the impact on the short term market is likely to be less than previously indicated, partly because the level of the tariff is lower than initially proposed, but also because China is believed to have already completed the majority of its procurement for winter.
World Maritime News Staff