“Trump created chaos”: how the new US oil sanctions will affect China
21 March 14:22
ANALYSIS
The US Treasury Department imposed new sanctions against Iran, which for the first time affected an independent Chinese refinery and other entities involved in the supply of Iranian oil to China. These sanctions, together with OPEC’s promise to compensate for excess production, have led to an increase in oil prices. But will they have a direct impact on China? Komersant ukrainskyi asked experts to analyze this move by the US and determine its possible consequences.
(Unexpected) geopolitical consequences: strengthening China’s position
Political analyst Oleh Lisnyi believes that the latest US actions are “wrong”. They lead to negative consequences for the US allies and partners, but not for China itself, against which everything is supposedly being done.
“My subjective impression is that everything that has been happening lately around the United States, everything that is being done in the United States, is in the wrong direction. As a result, we see that allies and partners suffer, but China wins and becomes more powerful,”
– the expert said in an exclusive commentary
He emphasizes the close cooperation between China and Russia since the beginning of the full-scale war in developing methods of circumventing sanctions. Therefore, it is very likely that the US anti-Iranian sanctions will affect China very indirectly.
In addition, according to the expert, China’s significant involvement in the US economy gives Beijing powerful leverage. Trump’s anti-Chinese sanctions will not go unnoticed by Washington, he believes.
“The Chinese economy is very much involved in, let’s say, the prosperity of the United States. Therefore, China has the ability to respond to any actions by the United States with its own sanctions, its own specific actions,”
– comments the political scientist.
In any case, no matter what problems these mandates would cause the Chinese, they will definitely not prevent China from actively preparing for its war.
“Let’s be realistic – China is preparing for war. It is preparing either to seize Taiwan or to a bigger war,”
– Oleg Lisnyi warns, pointing to numerous provocations by the Chinese Armed Forces in the seas, oceans, and in relation to Taiwan.
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Economic aspects: chaos in the oil market
Economist Oleksandr Okhrimenko notes that although China buys a lot of oil, and recently more from Arab countries than from Russia, the US anti-Chinese sanctions are not mainly aimed at the oil sector, but at electronics.
“The current US [anti-Chinese] sanctions are not so much about oil as they are about electronics. As for oil itself, China is not affected by such sanctions,”
– he comments exclusively for
In addition, the expert notes the contradictory position of OPEC and the uncertainty about its further actions in support of the United States. Because nowadays, paradoxical things are happening in the US foreign economic policy:
“It is very beneficial for the United States to see the price of oil fall rather than rise, because the US consumes a lot of oil products. But their current policy of sanctions and duties, instead of bringing down the price of oil, only raises it.
To a large extent, the actions of the Trump administration have led to the fact that the current situation on world markets is characterized by extreme uncertainty, Okhrimenko believes. Today, no one has a clear understanding of what will happen to the oil price in the future. Trump has brought chaos to the markets.
Trump’s trade wars
Donald Trump’s administration has imposed trade restrictions on China, Mexico, and Canada, the three largest trading partners of the United States. The US government imposed an import duty of 25% of the value of goods from Canada and Mexico, and 20% on goods from China. An additional duty is imposed on Canadian energy products.
These measures have caused concern among U.S. companies that depend on metals imports from Canada and Mexico. They are expected to look for alternative sources of supply, in particular in the Middle East, India, Chile, and Peru, which could lead to higher prices for aluminum and copper in the United States.
In addition, Canadian consumers reacted to the imposition of duties by boycotting American goods, canceling trips to the United States and refusing to buy American alcohol.
Economists warn that such trade disputes could slow global economic growth and cause inflation. Stock markets in the Gulf countries earlier reacted with a decline due to fears of a possible trade conflict. The cryptocurrency market also collapsed earlier.
All of these countries, including China, responded by imposing sanctions on American goods.
China’s strategy for dealing with chaos
According to Okhrimenko, China pursues a more moderate policy than the United States. And in this context, it is important for China to end the Russian-Ukrainian war.
“By and large, it is beneficial for China if there is no war. Because then the price of oil might actually go down. And it would be desirable for China to see the duties canceled. Then the price of oil would be really pleasant for China,”
– says Okhrimenko.
However, the expert points out that China’s actions in the current situation can hardly be called consistent: China supports both Russia and the peace talks; China is actively buying oil from Russia, but at the same time, it is trying to avoid sanctions.
“Trump has created a huge chaos. There is no telling how it might end,”
– summarized Oleksandr Okhrimenko
