Trade Deal Expected to Boost U.S. Energy Exports to China
U.S. crude oil exports to China are expected to receive a major boost from the trade deal signed between the countries earlier this week, with China pledging to purchase over US$50+ billion worth of U.S. energy products in 2020 and 2021, including crude oil, LNG and petroleum products. Chinese demand for U.S. oil had fallen dramatically in mid 2018 in the aftermath of rising trade tensions, which included the imposition of a 5% Chinese tariff on crude oil imports from the U.S. in September 2018. However, despite the drop in Chinese off-take over the past 18 months, growing demand from other oil importing nations in Asia and Europe ensured that U.S. oil exports continued to grow steadily during 2019, primarily on the back of record high production from the Permian Basin and the debottlenecking of domestic pipeline infrastructure transporting crude oil to the Gulf Coast for export. U.S. crude oil exports surged from around 2 million barrels in mid 2018 to cross the 4 million barrel per day mark in December 2019, according to data published by the EIA.