The White House’s sanctioning of Iran’s crude oil may create more trouble than success for those who rely on exporting American oil to China. The ongoing bilateral trade dispute could reach average Americans sooner than the White House thinks.

American oil could suffer

This trade dispute (or tariff war) between the two countries has morphed into a real problem for Americans in the oil business. The latest episode has China considering high tariffs on US oil imports or stopping the import all together, according to CNN.

The U.S. exports an estimated two million barrels of crude oil a day with about 300,000 barrels of that going to China. It’s an extremely small amount, but if China stops bringing in American crude it could cause U.S. producers to lessen the amount they export without altering production.

To the layman, it might not seem like a big issue, but there are two important things to remember; 1) China has the money and a healthy appetite for importing oil.

It's the world’s largest importer of oil. 2) China wants Iranian oil out in the global market. China’s involvement can help determine how much Iranian oil will be part of this market, and this potential action has become a thorn in the side of the U.S. government.

Calculated moves

The complication comes from Donald Trump’s decision to pull the United States out of the Iranian nuclear deal between Iran and six nations.

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Trump remarked he felt the existing terms are too favorable for Iran, as reported by CNBC and other outlets. Pulling out of the global deal means previous sanctions against Iran are active again. This means businesses buying Iranian oil can face stiff penalties. The benefit, for Iran, is that China wants their oil on the market, as do other countries. And this wrench causes infighting with the Organization of Petroleum Exporting Countries (OPEC), who are meeting this week.

The group isn’t exactly sure what to do with returning oil to the markets. Fox News reports, OPEC members are scrambling to replace Iran barrels. The sanctions, China’s need for oil, and potentially high tariffs for American oil to China are the ingredients for a recipe for chaos. Iran exports about 2.4 million barrels a day, and the US sanctions are set to remove at least 500,000 from the world market by the end of the year.

To continue this trend, one U.S. Senator is even pushing to outlaw all fossil fuels in the U.S. by 2050.

Scott Sheffield, executive chairman of Pioneer National Resources, told CNBC, “OPEC doesn’t know if 200,000 or one million barrels of Iranian oil will be off the market." Overall, as long as the tit-for-tat carries on between China and the U.S. goes on, the only losers may be American oil producers and their investors.

Purchase of Iranian crude has been on a steady decline, globally, and was expected to be even less by the end of the year, without the sanctions.

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