U.S. crude oil exports have been temporarily spared from Chinese tariffs, giving state-run oil refineries a short window to import as much as possible.

They're scrambling for U.S. imports because WTI, the U.S. benchmark, is selling at a $6.66 per barrel discount to Dubai crude oil. That's the biggest price difference of the year.

China announced 10 percent tariffs on $60 billion in U.S. imports Tuesday in retaliation for President Donald Trump's latest volley of tariffs that were announced Monday.

It's not clear when China's tariffs on crude oil will go into effect.

"Oil on the tariffs list will only impact trade flows but not overall demand and as such could weaken U.S. grades regionally and in the worse case WTI prices but the global benchmark Brent should not be affected," said Erik Warren, a trader at DNB Bank. "Only if economic activity goes down will Brent prices be impacted."

State-run Sinopec, the largest crude buyer in the world, and China Petroleum & Chemical Corp. have a huge opportunity to gain a price advantage until the window on U.S. crude closes.

As recent as June, China imported 455,000 barrels per day of U.S. crude oil, a new record. Volumes fell to 305,000 per day in July and 234,000 barrels per day in August.

Natural gas producers could also be negatively affected if they can't export liquefied gas to China anymore.

The American Petroleum Institute opposes the escalating trade war.

"We understand the need to address discriminatory trade practices, but this policy will essentially impose a new tax on $200 billion worth of products on which the American families and businesses rely," said Kyle Isakower, API vice president for economic policy. "This current trade dynamic works against U.S. energy sector growth and counter to the Administration's stated goal of energy dominance."

Crude oil prices up in Wednesday trading

Brent crude oil prices were trading at $79.23, up 0.25 percent, Wednesday morning while WTI prices jumped to $70.73 per barrel, up 1.26 percent from yesterday.

Analysts are awaiting data from the Energy Information Administration on gasoline supplies, which could affect prices. S&P Global Platts forecasts a 3 million barrel decrease in crude oil supplies with gasoline and distillates also decreasing.

Methane limits are lifted

Oil and gas producers are allowed to vent and flare more methane into the air under new Trump administration rules officially passed Tuesday. The rule applies on publicly owned lands in the United States. The Bureau of Land Management rules are meant to reduce the burden Obama-era policies placed on drillers.

API issued a statement in support of the new methane rules.

"We support smart, cost effective BLM regulations that focus on prevention of waste and the conservation of resources," said Erik Milito, API Upstream and Industry Operations Group director.

As the nation shifts away from coal for power generation in favor of natural gas, methane levels in the atmosphere have decreased. The levels have decreased 14 percent since 1990.

API said the Obama rule from 2016 reached far beyond its authority.

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