Despite Trade War, Oil Traffic Rises at Corpus Christi
Despite fears of rising crude tanker rates and the escalating trade war with China, the busy petroleum port of Corpus Christi, Texas reports that it has set a new tonnage record for the first nine months of the year.
Corpus Christi handled nearly 80 million tons of cargo in the first three quarters, up about five percent year-over-year. The growth was driven by an 11 percent increase in crude oil shipments and an 8 percent increase in other petroleum products.
“This tonnage record is one of many set by the Port of Corpus Christi in 2018, and it is indicative of the continued growth we have been experiencing in the energy sector,” said Sean Strawbridge, the port's CEO. “Our bullish outlook of success is reinforced by this achievement and we look forward to continuing our investments alongside those of our customers as Texas and the United States continues its trend as a strategic global provider of energy.”
Some commodity analysts predict that oil shipments to key Asian export markets will decline in the coming months due to a spike in crude tanker day rates. VLCC ton-mile demand and spot rates have both been driven higher as buyers look further afield to replace Iranian oil, which will be hit by renewed American sanctions on November 4. In turn, these higher tanker rates make it less cost-effective to ship American crude over long distances: Reuters reports that the price of sending a VLCC from the Gulf of Mexico to Asia has gone up by $1-2 million over the past week.
In addition, Chinese refiners have sharply curtailed purchases of American oil in response to the escalating trade war between Beijing and Washington. China is the world's largest oil importer, and until recently, it was the second-largest foreign buyer of U.S. oil, accounting for a 20 percent share of the American export market. In a reversal, Chinese refineries did not import any U.S. crude at all in August, according to rencent U.S. Census Bureau data.
In contrast, China's state-owned oil companies have continued to purchase Iranian crude, despite the threat of American sanctions. Beijing is not expected to comply with the U.S.-imposed ban on Iranian oil once it takes effect.