The trade war between the U.S. and China escalated over the weekend. At the G-7 meeting on Sunday, President Donald Trump claimed he could “declare a national emergency” over the trade war if he wanted to. And China’s currency, the yuan, hit an 11-year low on Friday following the Trump administration’s announcement of the latest round of tariffs on Chinese goods.
But the trade war is also affecting the energy market. West Texas Intermediate Crude futures fell last week after China retaliated, slapping its own tariffs on American goods.
Matt Smith, director of commodity research at ClipperData, says this tit-for-tat dynamic puts U.S. oil exports in a precarious position.
“With the announcement of this 5% tariff on U.S. crude going in [to China], that either means one of two things: either these guys have to pay up that 5% … or it has to find another destination, and China has to source their crude from elsewhere,” Smith says. “We’re gonna have to wait and see.”
What you’ll hear in this segment:
– How China’s new 5% tariff on U.S. crude oil could affect shipments already en route
– Where U.S. suppliers can ship crude, besides China
– Why new pipelines in Texas means even more U.S. oil is available for export
Written by Caroline Covington.