June 18 (UPI) — The U.S. energy market was dealt a significant blow by Chinese tariffs because it has few other outlets as big as China for oil exports, analysts said Monday.
China last week responded to U.S. trade decisions by saying it would strike back with duties on U.S. exports, including oil. Commentary published Sunday in the official Xinhua News Agency criticized U.S. President Donald Trump for trade action it said would isolate the world’s largest economy.
“If Washington is unable to stop its capriciousness, which costs the interests of people of both countries, reciprocal tariffs are the leverage China has no choice but to use,” it read.
First quarter crude oil exports to China averaged around 300,000 barrels per day. The U.S. Energy Information Administration reported a four-week moving average for crude oil exports for the week ending June 8 of 1.9 million bpd, up 139 percent from the same period last year
Analysis emailed to UPI from consultant group Wood Mackenzie found China has alternative suppliers apart from the United States.
“While China could secure the crude from alternative sources such as West Africa which has similar quality as the U.S. crude, the United States would find it hard to find an alternative market that is as big as China,” Suresh Sivanandam, a senior manager for Asia refining at Wood Mackenzie, said in a statement.
Xinhua reported Monday that the Chinese industrial sector was accelerating. That growth resulted in an increase in energy consumption last month.
The National Security Strategy unveiled last year by the U.S. president included energy as one of its central pillars. The Trump administration said in the doctrine it would promote energy exports, increased markets access and a competitive U.S. edge.
Congressman Ted Poe, R-Texas, the chairman of a terrorism subcommittee in the House of Representatives, said the United States could use its energy as a “force multiplier” for U.S. leverage overseas. Energy trade, meanwhile, could balance a trade deficit between the world’s two largest economies.
China did not, however, target liquefied natural gas. Nicholas Browne, Wood Mackenzie’s lead analysts on gas in the Asia-Pacific market, said trade restrictions on U.S. LNG would backfire for a Chinese economy looking to chart a greener future.
“It would also have created logistical headaches for suppliers to optimize their portfolios to ensure they could meet Chinese demand while redirecting U.S. LNG to other markets,” he said.