China's plan to put tariffs on U.S. crude oil shows it is willing to take more economic pain in the trade war than some in the markets have expected, according to a Bank of America Merrill Lynch's commodities analyst.

"They're hurting themselves on the domestic front by making it more difficult for domestic refineries to make money. The're hurting themselves on the international front by making their refineries less competitive," said Francisco Blanch, head of commodities and derivatives research at BofA.

Blanch said changes in shipping fuel requirements that take place early next year could "create a pretty big premium on light sweet grades which are mostly coming out of the U.S. these days." The world's refineries are expected to seek more of the lighter crude to make the low sulfur fuel, required globally by the International Maritime Organization.

"China will have to bid up international barrels," said Blanch, noting it would be similar to what happened in the soy bean market. China stopped buying U.S. soy beans but has been paying more to buy Brazilian beans.