HOUSTON (Reuters) - Chinese companies looking to sign long-term agreements to buy crude oil from U.S. oil exporters have virtually disappeared, the chief executive of Enterprise Products Partners LP said on Tuesday.
The United States and China have been embroiled in an increasingly bitter trade dispute for nearly a year, and it escalated recently with the U.S. imposition of 25% tariffs on $200 billion of Chinese goods.
The trade war has all but shut down shipments of U.S. crude to China, and it is unlikely Chinese buyers will sign long-term offtake agreements with U.S. crude exporters right now, Enterprise CEO Jim Teague said on the sidelines of a Houston energy industry conference.
“When I was in China, I heard two words at every meeting: ‘Trump’ and ‘tariffs,’” Teague said.
The Obama administration ended a 40-year ban on U.S. crude exports in 2015 and they have risen sharply ever since. The country now routinely exports more than 3 million barrels per day (bpd) of crude.
In the first half of 2018, China was the biggest importer of U.S. crude, averaging 377,000 bpd. In the six months ended February, the most recent data available, it has dropped to 41,600 bpd, according to the U.S. Energy Information Administration.
Enterprise, an oil pipeline and terminal operator, filed for permits in January to build a deep-water crude export terminal capable of handling supertankers some 35 miles (56 km) off the coast of Houston, joining at least seven other firms racing to build such facilities as U.S. exports climb.
Teague said demand for U.S. crude will shift to other countries as U.S. producers pump additional volumes.
“Demand will be what it is regardless of the trade war because trade patterns will just change,” he said. “The big (U.S. oil producers) will be the ones who will make it work.”
Reporting by Collin Eaton in Houston; Editing by Tom Brown