Chart of the Day: Trade Deal Drives China’s Imports of U.S. Crude to Record High
China imported a record amount of U.S. crude oil in July, marking the highest monthly volume since the data series began in 2008, official data showed.
In July, U.S. crude exports to China surged by 139% year-on-year to nearly 3.7 million tons, up over sixfold from the previous month, making the U.S. the fifth-largest crude supplier to the Chinese market, China’s General Administration of Customs revealed Tuesday. The previous record for oil imports from the U.S. was 2 million tons in January 2018.
China is accelerating its energy product purchases from the U.S. to meet its commitments under the phase one trade deal, multiple industry insiders said.
In January, the world’s two largest economies reached a truce in their trade war with the phase one trade agreement, in which China promised to buy $52.4 billion worth of additional energy products from the U.S. over the following two years from a 2017 baseline. The products range from crude oil to refined products.
In a six-month review of the trade deal on Monday, the two countries’ top trade negotiators made positive statements after a phone call, saying that they “see progress and are committed to taking the steps necessary to ensure the success of the agreement,” with the U.S. side calling China’s increases in purchases “significant.”
China has resumed crude imports from the U.S. since May as its economy has recovered from the fallout of the domestic coronavirus outbreak. From December, when the outbreak emerged, to April, China did not import any U.S. crude, except for less than 1 ton in March.
U.S. crude exports to China are likely to see a further boost in the coming months, multiple analysts said. In September, at least 12 very large crude carriers, better known as VLCCs, are expected to ship up to 25.1 million barrels — or at least 3 million tons — from the U.S. to China, up from an estimated six VLCCs this month, according to data compiled by energy consultancy Argus. Six of the 18 oil tankers were chartered by a trading arm of state-owned behemoth China Petrochemical Corp., better known as Sinopec Group.
The surge from the U.S. coincided with drops in imports from major crude producers including Saudi Arabia, Russia, Iraq and Brazil.
In July, China’s crude oil imports from the four countries all fell from the previous month. Saudi Arabia’s shipments suffered the largest drop, down 39.7% from the previous month, slipping from China’s top two supplier spots for the first time since July 2018. Russia was China’s biggest oil supplier in July.
Taking advantage of cheap international oil prices, China’s crude oil imports have grown significantly this year. In the first seven months, China bought 320 million tons of crude oil, an increase of 12.1% (link in Chinese) from the same period in 2019, with crude oil imports in July up 25% year-on-year, according to the National Bureau of Statistics.
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