President Trump is embroiled in several simmering trade disputes, but perhaps most concerning to investors are the tensions between the U.S. and China: Most recently, in retaliation to a slew of tariffs imposed by the White House last week, Beijing slapped tariffs on American oil.
While U.S. oil production may not be quite up to the levels of oil giants Russia and Saudi Arabia, losing the Chinese market would certainly deal a blow to American oil producers, which ship more than $1 billion of oil per month to Beijing.
The decision sparked concerns in the U.S. that China would turn to Iran as a potential oil supplier, buoying the Iranian market in the midst of the White House’s reinstatement of hardline sanctions on Tehran.
But according to former Exxon President Jerry Bailey, China is unlikely to risk further damaging its relationship with the U.S. by violating American sanctions.
“China is trying to walk a fine line with the U.S. as it is,” he said during an interview on Wednesday with FOX Business’ Liz Claman. “And I don’t think they’d want to press their situation and cause too much trouble.”
The brewing tensions between the world’s two largest economies comes ahead of Friday’s highly anticipated meeting of oil ministers from around the globe at the Organization of the Petroleum Exporting Countries in Vienna.
During the meeting, the group is expected to raise crude output after more than a year of cutting it to stabilize once-falling prices. Oil prices stabilized on Wednesday, with the Brent crude unchanged at $75 per barrel.
Bailey, however, said he anticipates the level of production will likely hold, because oil giants like Saudi Arabia -- the de facto leader of OPEC -- don’t want to see prices fall.
“They may have to add production to make up for the unrest in Venezuela and the Iranian sanctions that are ahead of us, as well as the effect in China,” he said. “But I don’t forecast in my view that there will be an increase.”