China’s retaliation against President Donald Trump’s tariffs is expected to reduce U.S. crude oil exports in 2025, a sector that was already slowing in 2024.
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| In 2024, US crude oil exports show signs of slowing growth, with an increase of just 0.6%, of which exports to China are down nearly 50%. (Source: Getty Images) |
China’s 10% tariff on US crude oil, which took effect on February 10, is threatening the world’s largest economy’s oil exports. US crude oil exports are expected to grow slowly in 2024, rising just 0.6%, with exports to China falling nearly 50%.
Matt Smith, an analyst at data analytics firm Kpler, said U.S. crude demand is nearing a peak and slowing growth in 2024 is accelerating the process. He predicted U.S. oil exports would start to decline in 2025.
Rohit Rathod, senior analyst at ship tracking firm Vortexa, forecasts US oil exports will fall to 3.6 million barrels per day in 2025 from 3.8 million barrels per day in 2024. China’s retaliatory tariffs will prevent the US from exporting certain types of oil, the analyst explained.
China consumes about 166,000 barrels of US crude oil per day, or 5% of the world’s largest economy’s total exports, but that figure will likely decline or be diverted to other markets after China announced its retaliation.
The export grades likely to suffer are high-sulfur medium sour grades such as Mars and Southern Green Canyon, which will account for 48% of China’s US oil imports in 2024.
Despite the tariffs, this volume of oil is not expected to face much difficulty. According to analysts, neutral sour crude is ideal for US refiners or can be easily diverted to domestic buyers, especially if the US imposes tariffs on Canadian and Mexican crude.
“The Gulf Coast is very fond of neutral sour crude. Refiners there are in dire need of it,” Rathod said. In addition to medium sour crude, China usually imports lighter, sweeter, lower-sulfur crude from the United States, such as West Texas Intermediate.
This oil could be diverted to Europe and India at competitive prices, analysts at Vortexa stressed.
According to data analytics firm Kpler, the Louisiana Offshore Oil Port (LOOP) will be responsible for exporting nearly 50% of US oil to China by 2024. LOOP port management has not yet commented on the tariff issue.
About 25% of US oil exports to China come from Enbridge's Ingleside facility in Texas, according to Kpler data.
Phil Anderson, senior vice president of Enbridge, said the facility would not be significantly impacted by the retaliation, as it exports less than 15% of its total volume to China. “The light crude market is globally favored,” Anderson said.
Occidental Petroleum, one of the top US oil exporters to China, has sold at least 13 cargoes (about 600,000 to 2 million barrels) of WTI Midland light sweet crude to the billion-people market in 2024. The company has not yet responded to the tariff rate.
In contrast to Washington, Beijing is unlikely to be hit as hard by President Donald Trump’s tariffs. According to Chinese customs data, in 2024, the country’s crude oil imports from the US will account for just 1.7% of its total oil imports, or about $6 billion. That’s down from 2.5% in 2023.
By 2024, China will increase its crude oil imports from Canada by 30%, or more than 500,000 barrels per day, thanks to the Trans Mountain pipeline expansion project. Over the next few years, China will continue to reduce its demand for US oil as it receives discounts from Russia and Iran.
The potential decline in oil exports represents an unintended consequence of President Donald Trump's protectionist economic policies and runs counter to his election pledge to maximize oil and gas production.
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