EghtesadOnline: Beijing’s retaliatory measures against US tariffs can include penalties on oil coming to China from America. A cut in Chinese purchases of US oil may benefit Iran's sales.
“The Chinese may just replace some of the American oil with Iranian crude,” John Driscoll, director of consultancy JTD Energy Services, was quoted as saying by Reuters, RT reported.
“China is not intimidated by the threat of US sanctions. They have not been in the past. So in this diplomatic spat, they might just replace US crude with Iranian oil. That would obviously infuriate [US President Donald] Trump,” he said.
China buys about $1 billion of oil a month from the United States. Chinese oil imports from the US have been growing recently, thanks to a record production surge in America, according to Financial Tribune.
Beijing said on Friday it would retaliate by slapping duties on several American commodities, including oil. If Beijing responds to Trump’s $50 billion trade restrictions with oil tariffs, this would make imports from Russia and OPEC more attractive for China, the analyst notes.
“With Trump’s politics, we’re in a world of realigning alliances. China will not just swallow US tariffs. This is tit-for-tat petroleum diplomacy. The OPEC/non-OPEC cartel is the big beneficiary of all this oil diplomacy, as it will squeeze global spare oil capacity and likely push up crude prices,” Driscoll said.
According to Bloomberg, Iran’s trade with China has more than doubled since 2006 to $28 billion. The biggest chunk of Iran’s oil exports go to China, about $11 billion a year at current prices.
Besides, according to currency experts, China is positioned to be a chief beneficiary of the US decision to withdraw from the Iran nuclear deal, as it would give China leverage to demand oil imports be priced in yuan.