China to reduce U.S. oil imports amid trade dispute

As disagreement of trade between the United States of America and China continues, Chinese oil buyers are planning to cut down future crude oil purchases from the US, industry sources in China says.

In retaliation against US tariffs imposed on Chinese products, Beijing had announced a 25% import tax on several US products including energy products like crude oil and refined
products, though when it will be implemented remains unclear.

Around 315,500 barrels per day of U.S. crude was imported by China in the first quarter of 2018, an amount eight the figures from the previous year. Chinese customs says this makes up 3.5% of China’s top crude oil imports

Reuters agency reports that several industry sources say one of Asia's largest refiner and biggest buyer of U.S. oil, Unipec - a trading arm of Sinopec - has offered to sell its U.S. crude to other Asian buyers.

“They (Unipec) only offer crude for September arrival, that means July-loading cargoes,” one of the sources said, although adding that the offer was “quite expensive”.

Officials from Unipec called it a normal trading activity, excess crude from its refining system are often resold depending on economics and the state of its supplies.

A top trading executive with Sinopec told Reuters the state refiner will maintain its usual import volumes for July-loadings, but can’t commit to bookings further out.

“Future purchases (from August-loading onwards) will depend on developments,” said the executive, who asked not to be named due to the sensitivity of the subject.

A Sinopec spokesman declined to comment.

Unipec said early this year that the company expects to trade up to 300,000 barrels per day (bpd) of U.S. crude oil by the end of the year, about triple the trading volume last year.

That will be worth roughly $7.7 billion over the whole year based on $70 per barrel of oil.

“If the tariff is a long-term problem, the U.S. is going to struggle to find a market as big as China,” Joe Willis, senior research analyst at Wood Mackenzie said at a Thomson Reuters industry seminar on Thursday.

“I don’t see a major impact on our purchasing program. Cargoes for July loadings are unlikely be affected,” said a planning executive with a Sinopec plant that buys 1 million to 2 million barrels of U.S. oil every month.

His plant this week nominated internally with Unipec for an August loading plan that is expected to be finalised a month later, said the planning executive.





Additional report from Reuters Agency

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