China is buying our oil and that could be Iran’s worst nightmare. It seems that the Chinese trade talks went nowhere, but despite that fact, China’s demand for U.S. crude oil might rise anyway. According to Reuters “China’s Unipec will resume purchases of U.S. crude oil in October after a two-month halt due to the trade dispute between the world’s two largest economies.” This news, along with reports that talks between French oil refiner Total and workers on three of its North Sea oil and gas platforms broke down, on meaning that a series of planned strikes will go ahead is raising concerns about tightening global supply and sending oil soaring. This comes on a day when oil traders await the rig count, news on Federal Reserve Chairman Jerome Powell’s debut address central bankers at Jackson Hole Wyoming as well as the weekend. The pullback in the dollar is also helping oil and if Mr. Powell sounds the least bit dovish, we could see a big move up in oil to end the week.
Reuters is reporting that oil production will stop in the North Seas when the strikes happens. The three fields’ oil production contributes about 45,000 to 50,000 barrels per day (bpd) to the North Sea’s Forties and Brent crude streams.
The China U.S. trade talks ended without of a lot of news to focus on. Bloomberg reported that in a statement, the White House said the countries “exchanged views on how to achieve fairness, balance, and reciprocity in the economic relationship, including by addressing structural issues in China” identified by the U.S. in an investigation into Chinese IP practices. The two nations had “constructive, candid” communication, and will keep in touch about the next steps, the China commerce ministry said in a statement released Friday.
Yet, it is clear that despite reports of China putting tariffs on the U.S., the big players are going to buy U.S. oil. Many thought that China would replace U.S. oil with Iranian oil, but now it appears that Iran’s best customer is going to use the U.S. oil as leverage to get Iranian oil at a discount. It is also a sign that that Chinese oil demand is not slowing as much as some may have thought. Reuters writes that the decision to start buying crude oil again from the United States comes after Beijing, earlier in August, excluded it from its import tariff list. A source with knowledge of the matter said Unipec will “buy some U.S. crude, loading in October, following the change in Beijing’s policy.” This news is supporting oil.
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