Political Posturing
For the oil and tanker markets, the Trump Presidency marked a notable shift in global politics, energy markets and international trade. Early on, the Trump Administration withdrew from the Paris climate agreement and soon started to use sanctions to exert it’s political will, taking a hard stance on Iran and Venezuela, leading to severe declines in crude production and exports from these countries. Back in 2018/19, the US/China trade war saw a dramatic fall in Chinese imports of US crude. Following the signing of the Phase One Trade Deal and once China’s oil demand recovered from the effects of the coronavirus related lockdowns, bilateral crude trade has moved to record levels, averaging around 0.7 million b/d during the 2nd quarter of this year versus hardly any trade during Q4 2019 and Q1 2020. However, more recently the US/China political relationship has hit perhaps its lowest point in decades, with the two countries clashing repeatedly over trade, coronavirus, and Hong Kong. In the last few weeks, the world has witnessed the closure of the Chinese consulate in Houston, sanctions on both Chinese and US officials, and Trump’s push to ban popular video sharing network TikTok in the US. It is unclear at this stage how the recent escalation in US/China tensions could impact the crude trade. For now, purchases remain strong and Chinese Charterers have booked tankers for August/September loadings, but clearly the latest political developments represent a viable threat.
Source:XINDE MARINE NEWS
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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