China's retaliatory tariffs against the United States could lead to a decrease in U.S. oil exports in 2025, marking the first decline since the COVID-19 pandemic, following a plateau in growth last year.
The export of U.S. crude has seen a significant increase by over 10 times since the removal of a 40-year federal ban on domestic oil exports in 2015. This surge has positioned the United States as the world's third-largest oil exporter, trailing behind Saudi Arabia and Russia, mitigating the global impact of production cuts by the Organization of the Petroleum Exporting Countries and its allies.
Although China's interest in U.S. oil has waned due to lower-priced Russian and Iranian alternatives, exports reached 166,000 barrels per day in 2024, making up nearly 5% of all U.S. crude exports, as per data from ship-tracking firm Kpler.
There was a slowdown in U.S. crude export growth in 2024, with an increase of just 0.6% or 24,000 bpd, averaging 3.8 million bpd, as U.S. companies held back on shale production amidst concerns about global demand.
Describing China's portion of U.S. exports as "significant," Matt Smith of Kpler suggested that international demand for American crude exports might be peaking, with China's retaliatory tariffs potentially accelerating this trend.
Regarding the types of U.S. crude imported by China, approximately 48% were medium-sour grades like Mars and Southern Green Canyon. Analysts believe that these grades, which are in demand by U.S. refineries, could potentially find buyers domestically, especially if the U.S. imposes tariffs on Canada and Mexico.
Analysts further noted that about 44% of China's U.S. crude imports were light, sweet grades like West Texas Intermediate, which may continue to find demand from European and Indian refiners due to competitive pricing.
The Louisiana Offshore Oil Port (LOOP) was a key player in handling exports to China last year. Additionally, a significant portion of U.S. exports to China originated from Enbridge's Ingleside facility in Texas.
Despite these developments, industry insiders do not foresee a significant impact on light, sweet crude exports, as they remain in high demand globally, including in China.
Notably, Occidental Petroleum stands out as one of the top U.S. crude sellers to China, having sold numerous cargoes of light, sweet WTI Midland oil in 2024.
It is estimated that U.S. imports accounted for 1.7% of China's total crude imports in 2024, a decrease from 2.5% in 2023. This decline is partly attributed to China's increased imports from Canada, driven by a 30% rise last year, due to the expanded Trans Mountain pipeline.