Oil already trade war's collateral damage even without duties
U.S. oil shipments are likely to be a casualty of the trade war with China, even though crude was spared from the latest list of American goods targeted with retaliatory tariffs.
While oil was never subject to levies during long-running dispute between the world’s two biggest economies, the flow of American cargoes to China have nevertheless been throttled by rising tensions over the past year. Refiners in the Asian nation -- previously the top Asian buyer of U.S. crude -- have largely avoided imports in a bid to avoid the risk of getting caught up in the trade war.
That means even without tariffs, the latest conflagration in the dispute threatens to snuff out a recovery in flows seen over the past couple of months that were driven by hopes that tensions were easing. That will close the door to a critical source of crude for buyers in the the world’s largest oil importer, at a time when refiners across the globe are scrambling for cargoes due to a supply crunch.
Oil in New York rose 2.5% to $63.17 a barrel at 9:44 a.m., while Brent crude, the global benchmark, was up 2.4% to 72.32 a barrel.
Middle East exporters are already cashing in on the squeeze that was driven by U.S. sanctions on Iran and Venezuela, as well as unexpected disruptions from Russia to Nigeria. Iraq raised the official selling price of its flagship Basrah Light crude for Asian customers to the highest level since 2012, after fellow OPEC member Saudi Arabia set the price of its Arab Medium variety at the highest since December 2013.
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