Unipec is the trading arm of China’s state oil company Sinopec and it has suspended crude oil imports from the United States due to growing trade tensions between the two countries. Unipec has no new bookings of U.S. crude until at least October. Chinese buyers had already slowed their purchases of U.S. oil to avoid a likely import tariff threatened by Beijing amid the escalating trade dispute between the world’s two largest economies.
China has placed U.S. energy products, including crude oil and refined products, on a list of goods subject to a 25 percent import tax, in retaliation for similar moves by Washington, but has not said when the tariffs will come into effect. This tariff amounts to USD $18 a barrel when crude is at USD $70, and it has deterred other Chinese buyers such as state-owned companies PetroChina and Zhenhua Oil, as well as independent refiners, from importing U.S. crude.
China is the largest buyer of U.S. crude after Canada, and the move has made it more affordable for other buyers in Asia. Unipec will continue trading U.S. crude and selling the oil to Europe but it is unlikely to ship any of the oil to the east as it no longer has a backstop for the oil if it cannot find a buyer at the right price during the voyage.
According to trade flows data on Thomson Reuters Eikon, China’s crude oil imports from the U.S. reached an average of 334,880 bpd in the first eight months of this year. Earlier this year, Unipec had said it expects to trade up to 300,000 barrels per day (bpd) of U.S. crude oil by the end of the year, tripling its trading volume of U.S. oil last year. China’s oil imports from West Africa are set to rebound in August to 1.6 million bpd, the highest since May. Unipec has also bought North Sea Forties and Russian Urals last month for September delivery when the arbitrage opened.