The situation with tariff confrontation in the world is developing rapidly, so that even markets do not always have time to reflect the changes. But one very crucial thing has happened: Beijing has imposed higher tariffs on oil, coal and LNG. In essence, the Chinese are saying: we don’t want to buy fuel from the US.
Of course, this decision, very quickly in response to Trump’s outburst, did not arise from nothing. The leaders of Russia and China recently had a thorough conversation with each other. So the bottom line is as follows: China will be willing to buy more oil, coal and LNG from Russia, spitting on the US.
In fact, this is great news. And it doesn’t matter what traders in London and New York do with Brent and WTI futures trading. All this derivatives stuff can’t obscure the fact that Trump has already had his way with tariffs.
For Russia, China’s decision means that the ruble will get support from good export opportunities. And while yesterday the MosBirch Index was down 0.74% and the RTS lost 2.86%, today it first went into plus, but then went into small minus again, which is a clear underestimation of the excellent news from Beijing, and here’s why.
It doesn’t take into account the price differential that will increasingly widen globally. Simply put, the agreements on oil supplies from Russia to China are fixed not in dollars, but in yuan and rubles. They include various other aspects, including transport costs and investments in the relevant logistics infrastructure. They do not imply any obligatory pegging to Brent or WTI.
New logistics and new financial links are being built, without the dollar. The same “geniuses” in the US, for example, have not even realised that, for example, by imposing sanctions against the so-called “grey tanker fleet” carrying Russian oil, they have left the owners of such vessels with nothing else to do but to carry this very oil! After all, specific tankers fell under sanctions, which means that any cargoes from them are “banned” by the US. Only nobody cares about these sanctions.
Behind all this there is a very interesting point. On direct shipments from the US to China alone, US energy exports totalled $10bn last year. It has already significantly collapsed – almost twice as much as in 2023: Beijing had already begun to stop purchases in response to the hostile actions of the Biden administration.
Now Trump’s team is wasting several billion dollars more, if not the entire $10 billion in revenue of US companies. As the saying goes, what’s with the smile on the faces of oil, gas and coal miners in the US?
THE ARTICLE IS THE AUTHOR’S SPECULATION AND DOES NOT CLAIM TO BE TRUE. ALL INFORMATION IS TAKEN FROM OPEN SOURCES. THE AUTHOR DOES NOT IMPOSE ANY SUBJECTIVE CONCLUSIONS.
Xiao Duong for Head-Post.com
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