After almost two years of trade-related tension that escalated into an all-out trade war of tariffs and restrictions, the U.S. and China seem to have entered a temporary truce that may benefit the U.S. oil and gas export industry.

The two countries signed a "phase one" agreement Jan. 15 in which Beijing pledged to purchase more than $200 billion of additional American products and services over the next two years.

Under the interim trade deal, China will purchase at least $30.1 billion worth of energy products in 2020 and at least another $45.5 billion in 2021, according to the Office of the U.S. Trade Representative. While Chinese firms bought $8.5 billion worth of U.S. energy exports in 2017, according to U.S. Census Bureau trade figures, that level shrank during a two-year trade war to $4 billion in the 12 months prior to November 2019. China has committed to buying at least $52.4 billion in additional energy purchases over the two years.

The agreement left blank specific amounts for each category of energy products. Prior to the agreement, analysts speculated that crude oil would make up the bulk of the exports sold to the Chinese because of infrastructure constraints, for LNG in particular, and China's national demand profile.

According to energy analysis firm ClearView Energy Partners LLC, 1 million barrels of U.S. crude oil at $60 per barrel would be just enough to hit the 2020 goal of $18.5 billion worth of additional energy purchases called for in the agreement. To get to the second year's goal of $33.9 billion would take 2 million barrels per day of crude and liquefied petroleum gases valued at $70 per barrel, according to Sanford C. Bernstein & Co. oil analyst Neil Beveridge.

"This is 20% of China's current crude imports," Bernstein said late Jan. 15. "This could be reduced by additional purchases of LNG, but we think that 20 million tonnes per annum (30% of China's current LNG imports) is an absolute stretch. This could reduce the crude import requirement to 1.6 million barrels per day. To reach 2 million barrels per day of imports from the U.S., China needs to push on all levers."

Before the countries signed the deal, however, China said it was planning to give foreign and privately held companies access to domestic oil and gas exploration in an effort to cut down on import costs and increase local production, Bloomberg reported Jan. 9.

China will allow companies that have at least $43 million in net assets to apply for licenses, Bloomberg reported, citing China's ministry of natural resources. The country previously gave permits only to state-owned companies, according to the report. China in July 2019 also lifted its ownership restrictions for foreign investments in the oil and gas sector, according to the article.