Oil markets are bracing for a reshuffle of global trade flows as China threatens to impose tit-for-tat tariffs on imports of U.S. energy products, including crude.
China, which has bought an average 330,000 barrels per day (bpd) of U.S. crude oil this year, is threatening to place a 25 percent tariff on various U.S. commodity exports, including crude oil, although it is so far unclear when such a measure would come in place.
The decision came in response to U.S. President Donald Trump saying he was pushing ahead with hefty tariffs on $50 billion of Chinese imports.
And it triggered an aggressive response by Trump, who on Monday threatened to slap a 10 percent tariff on $200 billion of Chinese goods in addition to the import duties previously announced.
The tariffs could restrict the flow of U.S. barrels going to China – a business now worth almost $1 billion per month
An import duty would make U.S. oil less competitive than other crudes, almost certainly resulting in a sharp fall of Chinese purchases, forcing U.S. oil firms to find other buyers.
In the first three months of this year, U.S. crude made up around 5 percent of China’s total crude imports, according to Chinese customs data.
via Reuters
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Alfonso Esparza
Latest posts by Alfonso Esparza (see all)
- Gold Lower as Trade and Brexit Optimism Put Pressure - 10/15/2019
- Oil Steady as Trade Optimism Fades - 10/15/2019
- The IMF Says US-China Trade War to Slow Down - 10/15/2019