Chris Wright told CNBC on Friday that China will increase its oil imports from the United States because the world’s two largest economies are natural trading partners when it comes to energy.
China is the world’s largest oil importer, and the United States is the largest producer. “There’s a renewable energy deal out there,” the U.S. Energy Secretary told CNBC’s Brian Sullivan in an interview in Port Arthur, Texas.
China is heavily dependent on the Middle East for oil imports. Most exports from the Persian Gulf have been cut off in recent weeks due to Iran’s blockade of the Strait of Hormuz. The Chinese government has vast strategic reserves, which have helped it weather previous turmoil.
“Oil imports from the United States are likely to increase,” Wright told CNBC.
Wright said China and other Asian buyers will eventually buy more oil from Alaska as the Trump administration expands production there. For the time being, he said, the Chinese government plans to import more oil from the U.S. Gulf Coast.
President Donald Trump earlier told Fox News that China has agreed to buy more oil from the United States, but Beijing has so far not confirmed whether there is such an agreement with the United States.
“They have an agreement to buy oil from the United States, and they’re going to go to Texas. We’re going to start sending Chinese ships to Texas, to Louisiana, to Alaska,” Trump told Fox News. The US president met with Chinese President Xi Jinping in Beijing this week.
Holmes will lose importance: Mr. Wright
Wright said Iran’s blockade of sea lanes would reduce the importance of Hormuz. The Energy Secretary said of Iran’s destruction of the Strait, “This is a one-time card.”
Until the United States and Israel attacked Iran on February 28, about 20% of the world’s oil supplies passed through sea lanes. In response, Iran’s blockade of Hormuz caused the largest energy supply disruption in history, severely impacting the economies of the Gulf Arab countries.
Wright said Gulf countries would build more pipelines to bypass Hormuz after the war. The United Arab Emirates already plans to accelerate construction of a new east-west pipeline that will bypass Hormuz.
“There may be other routes to extracting energy from the Persian Gulf,” Wright said. “The importance of the Strait of Hormuz will decline, but the importance of energy production and energy supply for these countries will not.”
