Oil prices edge up, US-China trade war in focus

Crude Oil

Crude Oil

US crude CLc1 was down 25 cents at $73.55.

As part of the retaliatory response, Beijing has threatened a 25 per cent tariff on USA crude imports, although it has not specified an introduction date.

"Mr. Trump sends every day a new message that creates uncertainty in the market", said Iranian Oil Minister Bijan Zanganeh stated in an interview. -China tit-for-tat on trade. "U.S. sellers would have to find alternative buyers".

Trump's trade war with China - which like the Iran conflict was predicated on the not entirely inaccurate argument that the USA was getting the short end of the stick with regards to business relations - is another example in which pundits are predicting rough road ahead, despite compelling arguments from minority voices that the dispute will eventually resolve in the Americans' favour.

American crude shipments to China now stand around 400,000 barrels per day (bpd), worth $1 billion a month at current prices. He also said that he is thinking of slapping additional duties on $500 billion in Chinese goods if Beijing retaliates.

An executive from China's Dongming Petrochemical Group told Reuters his refinery had already cancelled USA crude orders: "We will switch to either Middle East or West African supplies". He added that the country's oil production and exports had not changed just because of United States pressure.

In an early sign of future times, an executive from China's Dongming Petrochemical Group, an independent refiner from Shandong province, said his refinery had already cancelled USA crude orders.

"We expect the Chinese government to impose tariffs on (U.S.) crude", the executive said, declining to be named as he was not authorised to speak to media. He added that his refinery had cancelled US crude imports and would switch to Middle East or West African supplies instead.

JTD Energy's Driscoll said China may even replace American oil with crude from Iran. "They (Chinese importers) are not going to be intimidated, or swayed by USA sanctions", he said.

In Japan, Asia's third-biggest importer of crude, the oil industry has yet to react publicly to Friday's news.

Amid the turmoil, some in the region spot opportunity.

Crude oil prices went up on Monday during the Asian session due to the tight market after last week's U.S. crude oil reserves dropped to its lowest levels for more than three years.

"If China imposes tariffs, their refineries won't buy USA crude since it would cost more", Sandy Fielden, director of research for commodities and energy at Morningstar Inc., said by telephone.

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