I expect China's oil imports to be flat this year - even that would be a good outcome.

The economy still isn’t firing on all cylinders, some sectors are doing well, while others are struggling. To me, that translates into steady oil demand rather than rising demand, and there’s a real risk that imports could decline. One key factor to remember is that China doesn’t like buying oil when prices are high, so, I expect to see a pullback in imports starting in March, as the more expensive oil purchased in January begins arriving. If prices remain around $75–$80 per barrel, I think imports will stay flat at best. Additionally, with the ongoing trade tensions, China is likely to pivot even more toward discounted barrels from Russia, Iran, and possibly Venezuela.

How are other commodities being impacted?

It’s a mixed picture. Some commodities, like coal, are very weak. We’re seeing seaborne coal prices hitting four- or five-year lows. However, iron ore has held up surprisingly well, likely due to some optimism around China’s property market. While the sector isn’t booming, it has somewhat stabilized. That said, it’s hard to expect China to drive commodity prices higher this year. The strong US dollar is also acting as an anchor on commodity prices.

How should we interpret China’s response to US tariffs?

By putting 15% tariffs on US imports, including energy, it effectively kills that trade. China hasn’t been buying an enormous amount of oil from the US, averaging around 250, 000 b/d in recent months, in addition to about a million tons of LNG per month, and a couple of million tons of thermal coal. When you're importing 10 to 11 million b/d, losing a supply of 300, 000 b/d is not a major disruption. If China stops buying from the US, the US will also find other buyers, and trade flows will simply adjust. There might be minor impacts on freight rates and logistical costs, but overall, market fundamentals won’t change drastically. The bigger question is demand and whether it strengthens this year.

How has the market reacted to Trump’s retraction of tariffs on Mexico and Canada?

There’s some relief for now. There’s no immediate need to reorganize oil flows into and out of the US, and trade can continue as it was. That’s why prices have come down. But looking at the bigger picture, I think it’s becoming increasingly clear that Trump equals volatility. He keeps pushing boundaries to see what he can get away with. That is creating strong responses, as we’ve seen from Canada and Mexico, and that kind of tit-for-tat is becoming the norm. The real test will be how he handles Europe. Europe has a long-standing reputation of being weak, divided, and slow to respond in a unified way to these kinds of threats. If European leaders can stand up to Trump with retaliatory moves - even if it causes short-term disruption - that’s when things get interesting.