New York: China’s retaliatory tariffs on the United States could result in a decline in U.S. oil exports in 2025, marking the first drop since the COVID-19 pandemic, following a plateau in growth last year.
Since the U.S. lifted its 40-year federal ban on oil exports in 2015, exports of U.S. crude have surged more than tenfold, helping the United States become the third-largest oil exporter globally, behind Saudi Arabia and Russia. This growth has lessened the impact of production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
While China’s demand for U.S. oil has waned in recent years due to discounted Russian and Iranian oil, exports still totaled 166,000 barrels per day (bpd) in 2024, representing nearly 5% of total U.S. crude exports, according to ship-tracking data from Kpler. However, U.S. crude export growth slowed in 2024, rising by only 0.6%, or 24,000 bpd, averaging 3.8 million bpd, as U.S. companies remained cautious about shale production due to global demand uncertainties.
Matt Smith, an analyst at Kpler, noted that while China’s share of U.S. crude exports is “not an insignificant amount,” international demand for American crude may be peaking, and China’s retaliatory tariffs could accelerate this trend.
Of the U.S. crude imported by China, approximately 48% was medium-density, higher-sulfur crude types like Mars and Southern Green Canyon, which are considered medium-sour grades. These grades are ideal for processing in U.S. refineries and are likely to find domestic buyers, especially if the U.S. imposes tariffs on Canada and Mexico, analysts suggest. Rohit Rathod, a market analyst at Vortexa, pointed out that medium-sour grades are highly sought after on the U.S. Gulf Coast, where refiners depend on them. He predicts that U.S. exports could fall to 3.6 million bpd in 2025, particularly if Canadian and Mexican tariffs are implemented and medium-sour crude remains domestically available.
Also Read | ECB Optimistic About Digital Euro Progress Following Trump’s Crypto Proposal
On the other hand, roughly 44% of China’s crude imports from the U.S. were lighter, lower-sulfur types like West Texas Intermediate (WTI), known as light, sweet grades. These grades are in demand among European and Indian refiners at competitive prices, meaning they could continue to be exported despite tariff disruptions.
Kpler data shows that the Louisiana Offshore Oil Port (LOOP) handled nearly half of all U.S. crude exports to China in 2024. Enbridge’s Ingleside facility near Corpus Christi, Texas, accounted for an additional 25% of U.S. crude exports to China. A source familiar with Enbridge’s operations indicated that the light-sweet market remains robust and liquid, with minimal impact expected on exports, given that China accounted for less than 15% of the export volumes from this facility.
Also Read | ECB Warns of Potential Economic Setbacks for Europe Amid US-China Trade Tensions
Occidental Petroleum, one of the top sellers of U.S. crude to China, sold at least 13 cargoes of light, sweet WTI Midland oil to China in 2024, according to Kpler. Occidental did not respond to a request for comment.
For China, the impact of U.S. crude imports is likely to be muted, as U.S. oil accounted for only 1.7% of the country’s total crude imports in 2024, valued at approximately $6 billion, according to Chinese customs data. This marks a decline from 2.5% in 2023. To compensate, China has significantly increased its imports from Canada, up by about 30% last year, thanks to the expansion of the Trans Mountain pipeline.
