Two geopolitical developments in recent weeks - U.S. sanctions on Iran and the escalating U.S.-Chinese trade war - are set to reshuffle the U.S. oil flows to the world's fastest-growing oil market, Asia.
Such a tariff would make American crude oil uncompetitive in China, and U.S. oil sellers will have to find alternative buyers for their crude to replace the volumes they are currently selling to their second-largest oil customer after Canada.
India is an obvious possibility - its imports and demand are surging, and it may be willing to replace at least part of its Iranian oil imports out of fear that its companies and the sovereign could lose access to the U.S. financial system should it continue to buy Iran's oil.
The problem with India possibly replacing Iranian oil with U.S. crude is that American light oil isn't a substitute for heavy high-sulfur Iranian crude.
If China follows through with its threat to slap tariffs on U.S. oil imports, it would put downward pressure on the WTI Crude benchmark and widen its discount to Brent Crude, which could be make U.S. oil even more attractive to Indian buyers, according to Fielden.
According to WoodMac, U.S. crude oil exports to China averaged around 300,000 bpd in the first quarter this year, accounting for just over 20 percent of all U.S. crude oil exports.
With geopolitics-tariffs and sanctions-reshuffling the oil interests and oil flows of the U.S., China, India, and Iran, India alone may not be enough to absorb the U.S. oil exports to China, currently America's second-largest single oil customer after Canada.
https://www.zerohedge.com/news/2018-07-11/storm-brewing-us-oil-exports
Such a tariff would make American crude oil uncompetitive in China, and U.S. oil sellers will have to find alternative buyers for their crude to replace the volumes they are currently selling to their second-largest oil customer after Canada.
India is an obvious possibility - its imports and demand are surging, and it may be willing to replace at least part of its Iranian oil imports out of fear that its companies and the sovereign could lose access to the U.S. financial system should it continue to buy Iran's oil.
The problem with India possibly replacing Iranian oil with U.S. crude is that American light oil isn't a substitute for heavy high-sulfur Iranian crude.
If China follows through with its threat to slap tariffs on U.S. oil imports, it would put downward pressure on the WTI Crude benchmark and widen its discount to Brent Crude, which could be make U.S. oil even more attractive to Indian buyers, according to Fielden.
According to WoodMac, U.S. crude oil exports to China averaged around 300,000 bpd in the first quarter this year, accounting for just over 20 percent of all U.S. crude oil exports.
With geopolitics-tariffs and sanctions-reshuffling the oil interests and oil flows of the U.S., China, India, and Iran, India alone may not be enough to absorb the U.S. oil exports to China, currently America's second-largest single oil customer after Canada.
https://www.zerohedge.com/news/2018-07-11/storm-brewing-us-oil-exports
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