President Trump is using the International Emergency Economic Powers Act (IEEPA), Title II of Pub.L. 95–223, 91 Stat. 1626, enacted October 28, 1977 to force companies out of China.
- The IEEPA was drafted to permit presidential emergency declarations only in response to threats originating outside the United States.
- Past presidents have invoked IEEPA to safeguard U.S. national security interests by freezing or “blocking” assets of belligerent foreign governments, or certain foreign nationals abroad.
How will this affect Crude oil Prices? China’s announcement of new tariffs on another $75 billion of U.S. goods, including oil, brought back Brent crude rally that was above the $60 level and kicked it back down below.
Half of Saudi Arabia’s oil industry got taken offline by 1 drone
Yemen’s Houthi group said it attacked two plants at the heart of Saudi Arabia’s oil industry on Saturday, Taking out more than half the Dictatorships output, in a move expected to send oil prices soaring and increase tensions in the Middle East.
After drone attacks shut oil output in Saudi Arabia, the world’s largest crude exporter, a Department of Energy spokeswoman said the Trump administration is prepared to tap U.S. emergency oil reserves if necessary.
China Holds the cards on Oil Prices
Should China decide to defy the latest U.S. tariff threat by ramping up imports of Iranian crude oil in open defiance to the U.S. sanctions on Iran, oil prices could take a significant hit and plunge by as much as $20-$30 a barrel, Bank of America Merrill Lynch warned earlier this month.
in 2018 China import of crude oil: US$239.2 billion (20.2% of total crude oil imports)
in 2019 China’s crude oil imports in June averaged 9.63 million bpd, an increase of 1.7 percent from an average of 9.47 million bpd in imports in May, and a 15.2-percent increase from 8.36 million bpd in June last year, according to Reuters calculations in barrels from data in tons provided by the Chinese General Administration of Customs.
China is the world largest crude oil importer and any moves they make will impact global markets.