China is preparing to buy a record volume of oil from the United States

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Porto de importação de petróleo em Qingdao 9/11/2008 REUTERS

US oil supplies to China will skyrocket in the coming weeks, US traders, shipping brokers and Chinese importers said amid an upcoming meeting to assess compliance with the first phase of the US-China trade deal.

Chinese state-owned oil companies have pre-booked tankers to transport at least 20 million barrels of US oil for August and September, sources said, which could allay US concerns that China’s purchases are lagging far behind its Phase I commitments.

China was one of the top buyers of oil from the United States in 2018, when energy imports totaled $ 5.42 billion, before imports nearly halted due to trade disputes.

In January, China promised to buy $ 18.5 billion more of energy than in 2017, including oil and gas, so that as a result of the year, purchases amounted to about $ 25 billion.

According to the US Census Bureau , China’s purchases of US oil as of June 30 totaled $ 2.06 billion, reflecting the decline due to the coronavirus pandemic and the limited impact of the first phase of the trade deal.

Recently, however, China’s state-owned oil and gas company PetroChina and its largest refinery company, Sinopec Corp, have sharply increased their purchases, the sources said.

A compliance review of the U.S.-China trade deal, originally scheduled for Saturday, has been delayed due to scheduling issues and a new date has yet to be agreed, Reuters reported.

According to Refinitiv Eikon , China will receive 32 million barrels of American oil in August, which is a monthly record.

Pre-orders for tankers to China have risen sharply despite the fact that current oil prices in other parts of the world may be more beneficial to buyers, sources said, who asked to remain anonymous because they were not authorized to comment to the media.

According to a person familiar with the matter, PetroChina plans to purchase 3 million tons (about 22 million barrels) of American oil by the end of the year, which will amount to almost $ 1 billion.

Sinopec and PetroChina did not respond to requests for comment from Reuters.

The new deals are intended to show that China is still striving to meet the terms of the first phase, sources familiar with the matter said.

“This is clearly politically motivated (purchases) as the supply for Asia is replete with barrels cheaper than the WTI price ,” the trader said, referring to US West Texas Intermediate oil.