China International United Petroleum & Chemicals Co. (Unipec), a wholly-owned subsidiary of China’s oil major Sinopec, has reportedly suspended imports of crude oil from the United States amid ongoing trade tensions between the two countries, Reuters reported citing unnamed sources.
Based on the report, it is not clear until when will the suspension last, however, it appears that Unipec has no bookings for U.S. crude oil until October. Nevertheless, the company, which is the world’s largest charterer of VLCCs, is likely to continue trading U.S. crude.
The trading freeze comes as Washington is about to announce a new wave of tariffs against China targeting $200 million of Chinese goods, increasing taxes from 10 to 25 percent. China has already prepared a counter strike should U.S. move forward with the new tariffs. Namely, the Chinese Ministry of Finance announced it would impose a $60 billion worth of tariffs on U.S. goods, including LNG.
If the proposed tariffs, amounting to $16 billion, are implemented, the tanker and gas shipping industries can also expect changes to trade lanes as China switches to other supplier countries.
The US crude oil exports are most likely to be affected and these are primarily driven by China, which was responsible for 25percent of all US seaborne crude oil exports in terms of volumes in 2017, as indicated earlier by BIMCO.