U.S. Oil Exports Reduce Trade Deficit With China

There’s a really exciting story developing in the international trade between the United States and China, two of the world’s largest trading partners.

Here, the legalization of oil exports in 2016 from the United States has subsequently led to a rather dramatic surge in exports of petroleum products from the U.S. to China in 2017.

China imported nearly 100,000 barrels of crude oil per day from the U.S. in the first five months of 2017, 10 times the average in 2016, according to data by the Chinese customs.

The upward trend seems to be picking up speed. In April and May, imports surged to more than 180,000 barrels per day on average.

In February, China became the biggest buyer of U.S. crude oil, surpassing Canada, at a time when OPEC was scaling back its output, according to Bloomberg.

China’s own falling production, political uncertainty in the Middle East – on which China has long depended for fuel – and the cheaper price of US oil have contributed to the increase in imports.

According to the U.S. Census Bureau’s data on international trade, China imported nearly $496 million of U.S. crude oil, refined oil and other petroleum derived products in May 2017, which was more than double the $214 million of these goods that it imported from the U.S. in May 2016. Altogether, these petroleum exports accounted for 5.2% of all the oil that the U.S. exported to all other countries during May 2017, and 4.9% of the value of all the goods and services that the U.S. exported to China during the month.

For the first five months of 2017, the Census Bureau reports that the cumulative value of U.S. crude oil, petroleum gases and refined petroleum to China totals over $2.76 billion. For just U.S. crude oil exports, China has purchased $1.6 billion, which represents 21% of all U.S. crude oil exports to the world from January through May 2017.

That’s a pretty remarkable development when you consider that most of these petroleum product exports are loaded on container ships at growing U.S. port facilities in Texas and Louisiana, where it then must pass through the recently enlarged Panama Canal before transiting the Pacific Ocean to reach Chinese ports.