According to Bloomberg, major oil players in the US warned Trump administration that the region will struggle to produce the oil, gas and other energy product that China has agreed to buy under their phase one trade deal.
In fact, the phase one was inked by President Donald Trump back on 15 January and calls China to invest an additional $52.4 billion in liquefied natural gas, crude oil, refined products and coal over the two following years.
To achieve that, China would have to import 1 million barrels of crude oil per day, 500.000 barrels of refined products, and 100 tankers fully supplied with LNG, as the American Petroleum Institute with the Energy Department noted last month in their closed-door meeting.
Although, U.S. oil production is estimated to increase by less than 1 million bpd, API reported.
“The United States’ ability to expand its exports of crude oil and other liquids would likely become a binding constraint. And even if production is available, logistical challenges remain with marine shipping and the Panama Canal” said API said in its briefing for the Energy Department.
However, in its latest Short-Term Energy Outlook, the Energy Information Administration reported that the US oil production is about to grow by 1million bpd this year in comparison to 2019 and by another 400.000 bpd during 2021.
That means enough production to meet China’s higher demand, but it bears remembering that these are production forecasts that can change just as much as oil prices change.“Even if the oil is produced, the deal would strain the shipping industry as well” the API marked.
