Crude Oil as the new weapon in the U.S and China trade war?


As the U.S.-China trade war continues to escalate, Beijing and its energy giants appear to be bracing for a worst-case scenario where the spat would drag on for years and possibly result in Chinese foreign oil supply stifled.

The idea that the world’s top oil importer could see some of its overseas crude supply blocked has always been an unthinkable notion, but now some analysts and Chinese industry executives suggest that China should prepare for the very worst of the worst, such as its oil supply impacted by a lengthy trade dispute.

Chinese oil industry executives said this past week that China’s oil industry must have a contingency plan in case the trade war takes another turn for the worse.

Expectations for any sort of trade deal in the near-term are quickly dissipating, leaving investors to map out what else could get caught in the escalation between the U.S. and China. Here’s a new one to add to the list: Oil.

Higher oil prices though would be bad for China (as well as other emerging markets that import oil like India), further deteriorating its current account balance. “Could the China hawks in the U.S. administration also try to change Chinese behavior through a higher oil price?

just today Saudi Arabia raises July crude oil prices to Asia. Saudi Aramco has raised its July price for its Arab Light grade for Asian customers by $0.60 a barrel versus June to a premium of $2.70 per barrel to the Oman/Dubai average, the state oil company said on Sunday. –

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