China is choking off U.S. crude oil imports as trade tensions between the two economic superpowers grow strained under an ongoing trade war, The Wall Street Journal reported.
U.S. oil exports to China fell to nothing in the month of August and rebounded slightly to 30,000 barrels a day in September, far off the monthly average of over 350,000 barrels a day earlier in the year. China was the largest consumer of U.S. crude oil in the first half of 2018.
U.S. oil exports overall are still strong despite China’s choice to throttle back its consumption. The U.S. oil industry has increased shipments to Europe, Latin America and other Asian countries, breaking into new markets and increasing its market share in others.
“Even though China decides that they’re not going to buy from us, it doesn’t mean that export demand — just because of that one decision — drops,” Magellan Midstream Partners L.P. chief executive Mike Mears told WSJ. “More barrels will go to Europe, and more barrels will go to Latin America.”
China’s trade strategy could be an unorthodox attempt to dampen President Donald Trump’s “Energy Dominance” agenda to ramp up domestic energy production. China vowed retaliation after Trump levied $200 billion worth of Chinese goods on Sept. 24. China was limited in its response because the Communist-led country does not import enough American goods to implement a similarly sized tariff. (RELATED: US Tariffs Leave China Little Options That Aren’t ‘Playing Into Trump’s Hands’)
U.S. crude oil exports have climbed rapidly since Congress lifted a four-decade ban on exporting crude oil in 2016. The U.S. surpassed Russia and Saudi Arabia in September to take the top spot as the world’s leader in crude oil production.
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