Top China Buyer Races to Sell U.S. Oil as Trade War Deepens

(Bloomberg) --

Unipec, the trading arm of China’s state-owned oil giant Sinopec, is trying to resell U.S. crude that won’t arrive in the Asian country before import tariffs take effect on Sept. 1.

At least three buyers in Asia received offers from Unipec for crude that’s already en route to China, according to people with knowledge of the matter who asked not to be identified because the information isn’t public. Beijing announced last Friday that it would levy duties on American crude imports for the first time. The 5% tariff will make cargoes from the Permian Basin around $3 a barrel more expensive for Chinese buyers.

Unipec is seeking to sell U.S. crude that loaded on supertankers at ports including Southtex and Galveston, said the people. Four or five vessels carrying as much as 10 million barrels of oil are en route to China and are scheduled to arrive at their destinations after Sept. 1, they said. It takes almost two months to sail from the Gulf of Mexico to China.

Nobody answered two telephone calls to Sinopec’s press office during regular working hours on Wednesday.

Unipec’s predicament highlights how the trade war is disrupting global commodity flows. China was the biggest foreign buyer of American crude as recently as the middle of last year but imports were subsequently slashed as the trade dispute worsened. Purchases picked up again this year, reaching 1.5 million tons in July, data from the General Administration of Customs show.

Supertanker New Energy discharged a shipment of American oil at the port of Lanshan in China earlier this week, while another tanker carrying U.S. crude, Svet, is currently moored at a port near Qingdao.

Two traders that were approached by Unipec said it’s unlikely that a single company can purchase a supertanker-sized volume of oil from the Chinese seller because refiners have already completed their purchases for delivery in October to November. The ships that are on their way to China with American oil, set to arrive in September or October, are all very large vessels that can carry about 2 million barrels of crude.

To contact Bloomberg News staff for this story: Sarah Chen in Beijing at schen514@bloomberg.net;Serene Cheong in Singapore at scheong20@bloomberg.net;Sharon Cho in Singapore at ccho28@bloomberg.net

To contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Andrew Janes, Alexander Kwiatkowski

©2019 Bloomberg L.P.

With assistance from Bloomberg