Trade war continues between US and China

NEW DELHI: Earlier this month Unipec, China’s main oil importer and the trading arm of the world’s largest refiner by capacity Sinopec, suspended US shipments. This is believed to deflect some heat from US sanctions on Iran away from India and give New Delhi some Iranian oil flowing even after the curbs.

In retaliation of Washington’s tariffs on Chinese exports, Beijing intended to slap duty on US crude.  It was left out of Beijing’s list of retaliatory tariffs on US goods worth $16 billion in the last week. In both the cases it would benefit India. “It takes two months for tankers to reach China from the US.  Shipments would be fraught with the risk of being hit by tariffs if they are imposed in between,” said an executive. China is both the largest consumer of Iranian oil and the largest buyer of US crude in Asia. Where  India is the second largest buyer of Iran’s oil. The executive added, “If China is not buying US crude then that leaves India, with 5-6% annual demand growth and ability to process a wide variety of crudes as the only major Asian buyer with capacity to absorb the supplies shunned by the Chinese. Other Asian buyers; South Korea, Taiwan and Thailand may not be able to accommodate much extra US oil.”

Replacing Saudi Arabia, Iran became as India’s second largest crude supplier in the first quarter of current fiscal. It was also India’s second largest oil supplier after Saudi Arabia till 2010-11.

It dropped to seventh position after India reduced import of Iranian oil to meet conditions of waiver granted by Barack Obama.