Oil and gas traders in China are reportedly seeking waivers for the tariffs set to be imposed on U.S. crude and liquefied natural gas (LNG) imports starting from February 10.
According to Reuetrs, these tariffs are a response to earlier U.S. tariffs and will include a 15% levy on U.S. coal and LNG and a 10% tariff on crude oil, farm equipment, and some autos.
Following the announcement of U.S. tariffs by President Donald Trump, which took effect last Tuesday, China’s Finance Ministry outlined the retaliatory measures. Currently, four tankers carrying a total of 6 million barrels of U.S. West Texas Intermediate (WTI) and Alaskan North Slope (ANS) crude, along with two LNG vessels, are en route to China, according to data from analytics firms Kpler and LSEG.
Companies are expected to request waivers for tankers that have already been booked, as indicated by three oil traders. However, obtaining waivers for new deals is anticipated to be more challenging, two of the traders added. Unipec, the trading arm of Asia’s largest refiner Sinopec (OTC:SHIIY) and a major Chinese purchaser of U.S. oil, is involved in long-term deals and participates in the U.S. pipeline oil business.
A source close to Unipec told Reuetrs that the imposition of a 10% tariff may lead the company to conduct more oil swaps with countries like Korea and Japan or increase sales to domestic customers in the U.S. Sinopec has not provided any comments on this matter.
Moreover, data from Kpler and LSEG revealed that at least eight more Very Large Crude Carriers (VLCCs) have been chartered by firms including Vitol, Gunvor, Occidental (NYSE:OXY), ExxonMobil (NYSE:XOM), and Atlantic Trading and Marketing Inc., the trading arm of France’s TotalEnergies (EPA:TTEF). These companies typically do not disclose details of their commercial activities.
In terms of LNG shipments, the vessel Mu Lan, which picked up a cargo at Corpus Christi on December 16, is expected to arrive at the Fujian terminal on Thursday. Another vessel, the Wudang, which loaded at Calcasieu Pass on January 7, is due to reach China between February 9 and 11. PetroChina controls both vessels.
Analysts from Kpler forecast a sharp decline in U.S. LNG flows to China, favoring European and alternative Asian destinations once the 15% tariff is implemented. Consequently, China is likely to increase LNG imports from alternative suppliers such as Qatar and Russia to compensate for the potential reduction in U.S. imports.
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