China Now Number One Customer For US Oil

Andrew Follett | Energy and Science Reporter

China is now the largest foreign buyer of U.S. oil, according to new data from the U.S. Energy Information Administration (EIA).

U.S. crude oil exports in February jumped 35 percent from a month earlier, according to EIA. This rise in total exports caused China to start buying American oil. China purchased more oil because the U.S. was selling more.

China’s dramatic economic growth over the last decade has fueled its lust for oil, and demand has long surpassed their oil industry’s production capabilities. As China’s need for oil imports rose, imports heading into the U.S. fell due to the hydraulic fracturing, or fracking boom.

“While it might be impressive that China, at least for the moment, is the number one importer of U.S. oil, we need to wait and see if this trend continues,” Harry J. Kazianis, director of defense studies at the Center for the National Interest, told The Daily Caller News Foundation.

“Geo-strategically, it makes sense for Beijing to buy up as much oil from as many different sources as possible, never being dependent on any one source,” Kazianis said.

China surpassed the U.S. as the world’s largest net importer of petroleum in 2013.

“The U.S. is a larger exporter of crude than many OPEC countries,” John Auers, a vice president at an energy consulting firm, told Bloomberg Markets. “That China is buying more means that the U.S. has become a larger player in the global crude export market.”

China is expected to buy roughly 70 percent of its oil from foreign sources over the next few decades, largely from unstable parts of the world.

Sudan provides 7 percent of China’s oil imports, and over one-third of Chinese oil imports come from sub-Saharan Africa. Some of China’s largest oil suppliers — Angola, Sudan, Nigeria, and Equatorial Guinea — are known for political instability.

“Considering the fact that China has very little oil of its own, they will likely buy from anyone, and that includes the U.S.–a competitior in the Asia-Pacific,” Kazianis said. “Beijing buys oil from all over the planet, especially from African sources like Angola, which they have pumped billions of dollars into, to make sure they have strong access.”

China’s two largest oil suppliers, Russia and Saudi Arabia, are more stable than African suppliers, but both countries are involved in regional conflicts. China prefers to avoid being drawn into such confrontations, especially given tensions with its own Muslim populations located in the western part of the country.

“Over the long-term, I don’t see China wanting to push imports of U.S. oil any further than they already are,” Kazianis said. “Beijing would never want to be in a position that if it were into enter a crisis situation with Washington–think trade, the South China or Taiwan–that it would fear its dependence on oil could be used against them. Some oil is good for diversity–but dependency would be something China would never allow.”

Rising U.S. oil production could make that dependency more likely. EIA expects oil production to top nine million barrels a day in 2017.

China’s own fracking revolution has been stalled because its shale reserves, though large, are prohibitively expensive and technically difficult to extract. Chinese shale oil is estimated to be economically recoverable at $345 a barrel.

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