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The China Trade Deal Might Not Have Much Effect On The U.S. Oil Industry

January 17, 2020

Via: Forbes

The phase 1 trade deal with China has been signed at the White House and includes the Chinese promise to ‘strive’ to import $50 billion worth of oil and natural gas from the U.S. this year and next. Although that sounds wonderful, the truth, while positive, is somewhat less beneficial for the industry.

First, it must be acknowledged that U.S. oil and gas exports (the later liquified natural gas) have dropped sharply since the trade war began in 2018, as the figure below shows. Revenue had peaked out at something like $1.5 billion per month, or about $18 billion per year, close to what China is promising for this year, implying the target should be easy to reach. Next year’s target of $34 billion is much more ambitious, at least on paper.

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