U.S. Crude Oil Exports To China Zero Out

It wasn’t just U.S. soybean exports that encountered some serious shenanigans in August 2018 as part of China’s trade war strategy with the United States. International U.S. trade data also indicates that U.S. crude oil exports to China also collapsed during the month. In this case, all the way to zero.

Unlike what happened with soybeans, however, U.S. crude oil shipments didn’t get diverted to another nation, but instead, never left the U.S. The following chart shows the value of U.S. crude exports to the world, to China, and to the world excluding China in the period since the U.S. government lifted a 40-year oil ban on the export of crude oil from the United States in mid-December 2015, where since the end of 2016, U.S. crude oil exports to China have made up 20-25% of the nation’s total exports to the world on average.

What makes the decline to zero in August 2018 particularly notable is that U.S. crude oil exports to China had just topped $1 billion in a single month in June 2018. They then dipped back to $853 million in July 2018 before plunging to zero in August 2018, as China simply stopped buying crude oil from the U.S. during the month.

BIMCO, the world’s largest international shipping association, explains what appears to have happened and its impact on the shipping industry.

In August, no US seaborne exports of crude oil to China were recorded. A massive change to the export pattern seen since early 2017. Chinese buyers, led by the world’s top tanker charterer Unipec, were rumoured to have stayed away – and new data proves it. Now rumours have it, that Chinese buyers returned in early October, data will eventually show if this is right and to what extent at a later stage.

Despite being left out of the ‘official’ trade war at the last minute, crude oil was removed from the Chinese USD 16 billion list before it came into force on 23 August 2018, crude oil exports are now taking centre stage. BIMCO’s Chief Shipping Analyst Peter Sand comments: “The tanker shipping industry is hurt when distant US crude oil export destinations like China, are swapped for much shorter hauls into the Caribbean and South, North and Central America.