China's decision to remove crude oil from its latest tariff list in an escalating trade war with the United States was a relief to state oil firms prompted by a strong lobbying effort by main importer the Sinopec Group, Beijing-based oil sources said.
Dropping crude oil from the final tariff list on $16 billion in U.S. goods announced late on Wednesday underscores the growing importance of the United States as a key global producer and critical alternative supply source for top importer China, which is seeking to diversify its oil purchases.
Removing crude imports, worth roughly $8 billion annually based on Sinopec's earlier forecast of 300,000 barrels per day (bpd) for 2018, also gives Beijing room to maneuver in future negotiations with Washington, especially as it may soon lose some Iranian oil shipments due to reimposed U.S. sanctions.
"Sinopec did a lot of lobbying work with the government," said one person with direct knowledge of the state refiner's efforts to sway the policy decision of various agencies such as the Ministry of Finance and the Ministry of Commerce.
Sinopec declined to comment.
The revision came after Sinopec — Asia's largest refiner and biggest buyer of U.S. oil — suspended new bookings until at least October over worries that a 25 percent tariff would prohibit it from finding buyers in China.
"The U.S. will be the single largest source of new oil supplies outside OPEC. It's in China's interest to diversify supplies," said a second source, a state oil trading manager. The move could encourage Sinopec to bring in cargoes loaded in June and July, and resume new bookings, the sources said, declining to be named due to the sensitive nature of the topic.