The trade war between the two largest economies just went up a notch. In a surprise move, China has stopped buying Crude from the United States (US) and is buying it from West Africa. According to OilPrice.com, China has totally stopped buying Crude from the US.
“We are one of the major carriers for crude oil from the U.S. to China. Before (the trade war) we had a nice business, but now it’s totally stopped,” CMES president Xie Chunlin told Reuters on the sidelines of a global maritime forum in Hong Kong on October 3rd.
China started buying from the US in 2016 and in July, it hit 510,000 barrels per day. Assuming the US was pumping 10 million barrels per day, this works out to 5.1% of US production. US will have to find a new home for this supply and is looking at several countries including India. Remember, I said a few days ago that India is in a nice spot as far as crude is concerned?
Crude concerns for India should wane
Now in addition to Iran and Saudi Arabia, the US also wants to sell to India. With good negotiating skills, India will be in a position to lock long-term crude agreements which will ensure a stable supply for its refineries. And if all these deals were to be Rupee based, that will actually result in the Rupee appreciating against the Dollar! And it will deal a death blow to the unscrupulous cabal that is shorting the Rupee and rooting for it to hit Rs.100 to a US Dollar.
But and this is a big but, India will need to do these negotiations skillfully, ensuring that it gets a good deal not only on Crude but also some commitments from these three producers to act decisively against Pakistan. Will it? Only time will tell.
 Trade War ‘Totally Stopped’ US Crude Oil Shipments to China – Oct 3, 2018, OilPrice.com