China Doesn’t Want to Play with the U.S. Anymore, and the Fallout Could be Catastrophic…

China: I don’t want to play with you anymore… 

China just told the U.S. to shove its LNG where the sun don’t shine… and not in a subtle way. Zero LNG shipments from the U.S. have landed in China for over 10 weeks. More specifically, the last American tanker to show face in a Chinese port was in early February, and another one literally had to divert to Bangladesh mid-route because Beijing dropped a fat 15% tariff on U.S. LNG. Since then, that number has since surged to 49%. 

And guess who is right there to pick up the slack. Russia. Because when China stops buying from the U.S., someone’s gotta fill the tank. And Moscow’s more than happy to oblige, sanctions and war crimes be damned. Meaning, the fallout here is real AF. 

Especially since the long-term supply contracts—literally signed to run through 2049—between Chinese giants like PetroChina and Sinopec and U.S. exporters. These deals were the bedrock for pushing through massive LNG terminal expansions in Texas, Louisiana, and even Mexico. Billions in investment were justified based on the assumption that China would keep buying. Now? That demand just evaporated. If you’re a U.S. gas exec, you’re either renegotiating those contracts or figuring out which European buyer you can dump those cargoes on. Tragic. 

(Source: The Financial Times) 

Now, to be fair, this isn’t the first time China’s iced out U.S. gas. During Trump’s first term, there was a similar freeze that only thawed when Beijing graciously handed out waivers. But that was when Chinese gas demand was booming. However, at the present time, demands grown soft, and Beijing has diversified the hell out of its energy supply. Australia and Qatar are locked in long-term, meanwhile Russia’s basically serving gas on a silver platter. So yeah, China doesn’t need U.S. LNG, and that’s the whole point to it. 

What’s more is that China and Russia are already negotiating a second gas pipeline, Power of Siberia 2, and if that deal gets inked, it’ll be another nail in the coffin for U.S.-China energy ties. Russia’s already the third-largest LNG supplier to China, and this is just another example of the U.S. is being economically boxed out while Russia is being propped up. 

(Source: Giphy) 

So yeah, if you didn’t realize it before, then you do now. This is a trade war escalation, an energy market disruption, and a geopolitical power shift all rolled into one. Now obviously, the energy market will adapt. Prices in Europe might even soften as American cargoes get rerouted, but still, the long-term damage is already done. Aaaaaand, this is exactly what it looks like when the world’s biggest energy consumer decides it doesn’t need you anymore… and starts building the future with your enemies. Greaaaat. 

For now, keep your eyes on this story and the impact that will follow. As always, place your bets accordingly and stay safe out there. Until next time, friends…

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Stocks.News does not hold positions in companies mentioned in the article.