April 10 (UPI) — U.S. oil exports may face headwinds in reaching the Asian markets should a trade war erupt between the United States and China, an industry report found.
The Chinese government last week introduced a list of U.S. products worth $50 billion in imports that could be the subject of stiff tariffs, a tit-for-tat response to trade actions taken by U.S. President Donald Trump. Amid tensions last week, U.S. Trade Representative Robert Lighthizer said Washington would consider the “appropriate response” to any new trade threat.
The United States is sending more or its own oil to the open market as its shale production accelerates. The four-week moving average for crude oil exports is around 1.7 million barrels per day, more the double the level from last year.
U.S. crude oil, under the benchmark of West Texas Intermediate, may be more attractive in some markets because of the discount to Brent, the global benchmark. WTI was $5.30 per barrel less than Brent early Tuesday.
A review of pending data from the U.S. government from commodity pricing group S&P Global Platts found U.S. crude oil exports could be in the cross hairs of a potential trade war.
“In this environment, an escalation between Washington and Beijing over trade casts a large shadow in both direct and indirect terms,” Oil Futures Editor Geoffrey Craig said in an emailed market report. “For example, China could slap tariffs on imports of U.S. crude oil.”
U.S. data showed Russia, however, is the largest oil supplier to the Chinese market. Russia last year exported about 1.2 million barrels per day on average to China, compared with the average 1 million barrels per day from Saudi Arabia.
Speaking Tuesday at the Boao Forum for Asia, Chinese President Xi Jinping cautioned that trade wars are zero-sum games where there are no winners. Without mentioning Trump specifically, the Chinese president said there are distinct global options between openness and isolation.
“Putting oneself on a pedestal or trying to immune oneself from adverse developments will get nowhere,” he was quoted by the official Xinhua News Agency as saying.
Market tensions eased somewhat early Tuesday as both sides are expected to sit down to discuss the evolving economic relationship later this week in New York City.