CNOOC/Unocal deal can only lower oil price, as explained by this Washington Post Editorial, and this commentary. Because
- China (or any oil importer) has the incentive to lower oil price by maximizing production, while the oil corporations (and Saudi, and even many in the US government) do not
- In the deal proposal Unocal's reserve in US will not be touched (or will be sold away back to US business). Unocal's reserve outside US are mostly natural gas (need to be converted into LNG as there is no pipe connection), so the most likely scenario is for China to divert the LNG back home, hence shifting China's oil consumption into LNG, or in longer term helping with the global effort in learning how to lower the cost of LNG power generation. In either case, the world demand in oil will be soothed
- The sums of supply and demand of oil in the world do not change even if all Unocal's production are sold to China, because such activity reduces supply to rest of the world at the same time it reduces demand from China, by the exact same amount. China is going to purchase that amount of oil from world market if it does not buy it from Unocal, perhaps at a higher price, hence pushing up the oil price in the world market.
- As stated previously, if CNOOC tries to push up the production of the Unocal field, it is going to increase demand and hence lower the oil price in world market. The supply will only be squeezed if China buys more oil than its own demand. Because Unocal's total daily capacity only represents less than 15% of China's import, or less than 7% of its daily damand (much lower in future as its demand increases), it is impossible for China to hoard oil
In short, only oil exporters such as Russia and Saudi has the power to change the oil price, and hence the power to pose security threat to US oil supply. Economic analysis shows that changing hand of an oil field to a net importer does not change demand supply balance. The Unocal deal is not neccessarily a good deal to CNOOC as viewed by many (see also WSJ Jun 23rd about PE comparison), the US congress is probably doing CNOOC shareholders a favor by blocking the deal. However, conflicting message to China about free market is not going to help US achieve its goal of promoting free market and democracy, whatever such goal is or if such goal exists. Even worse, does US prefer to corner China into where it has no other option for energy than dealing with Sudan, Libya and Iran? or to push China into hoarding more crude oil reserve than it plans as a result of insecurity of lacking oil reserve (China has the greenback to do so)?