China move to drop crude off tariff list a relief for major refiner
BEIJING, Aug 10 (Reuters) - China's decision to remove crude oil from its latest tariff list in an escalating trade war with the United States was a relief to state oil firms prompted by a strong lobbying effort by main importer the Sinopec Group, Beijing-based oil sources said.
Dropping crude oil from the final tariff list on $16 billion in U.S. goods underscores the growing importance of the United States as a key global producer and critical alternative supply source for top importer China, which is seeking to diversify its oil purchases.
Removing crude imports, worth roughly $8 billion annually based on Sinopec's earlier forecast of 300,000 barrels per day (
"Sinopec did a lot of lobbying work with the government," said one person with direct knowledge of the state refiner's efforts to sway the policy decision of various agencies such as the Ministry of Finance and the Ministry of Commerce. Sinopec declined to comment.
The revision came after Sinopec - Asia's largest refiner and the biggest buyer of U.S. oil - suspended new bookings until at least October over worries that a 25 percent tariff would prohibit it from finding buyers in China.
"The U.S. will be the single largest source of new oil supplies outside OPEC. It's in China's interest to diversify supplies," said a second source, a state oil trading manager. The move could encourage Sinopec to bring in cargoes loaded in June and July, and resume new bookings, the sources said, declining to be named due to the sensitive nature of the topic.
U.S. IMPORTS COULD OFFSET LOST IRAN OIL
Some analysts say Beijing is bowing to China's heavy reliance on imported crude oil. "The issue for the Chinese is that any tariff on U.S. exports, (including) oil, will likely hurt their economy disproportionately because they have to import," said Kenneth Medlock, senior director of the Center for Energy Studies at Rice University's Baker Institute for Public Policy. "U.S. exports will find a home regardless of how the global supply deck is reshuffled," Medlock said.
Although crude oil has been dropped off the list, refined fuels including propane, kerosene, diesel
Chinese imports of other refined fuels were negligible. China's U.S. crude oil purchases shot to a record 553,000
China now takes in around 650,000
"China's decision to drop crude may be an attempt to keep U.S. crude as leverage for potential negotiations," Michal Meidan of Energy Aspect wrote in a client note. But it could also just give Chinese buyers more time to bring in U.S. crude they have already bought, she said.
(Reporting by Chen Aizhu; Additional reporting by Gary McWilliams in HOUSTON and Henning Gloystein in SINGAPORE; Editing by Tom Hogue)
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