China announced that it will sell oil from its national petroleum reserves for the first time as Beijing strengthens its efforts to curb inflationary pressures from commodity markets.

State Grain and Material Reserve On Thursday, it said it would release a batch of oil for sale to domestic refining and chemical companies to “relax the pressure of rising raw material prices.”

“Bringing the country’s reserve crude oil to the market through open auction sales will stabilize the supply and demand of the domestic market and effectively guarantee the country’s energy security,” he said.

Other large oil importers, such as the United States, regularly use their reserves to meet supply disruptions and budget needs, but China has publicly stated its intention to use its stocks. This is the first time we have announced it.

China, which has overtaken the United States to become the world’s largest oil importer in the last decade, has historically made little public about its large strategic petroleum reserves, and the Reserves Department has announced the amount of oil it sells. It was not specified.

Amrita Sen of consultancy Energy Aspects said China had quietly sold its oil reserves in the past, but now seems to want to rotate its stocks more often and more publicly to try to curb inflation. Said. “This isn’t new, but I think the announcement is new and I think it’s their attempt to keep domestic prices down,” she said.

But the move can also be seen as a warning shot to the Opec + group, which is facing criticism that oil prices are rising too quickly as the global economy is recovering from the coronavirus pandemic.

Opec and its allies last week chose to stick to the current timeline to increase reduced production at the start of the pandemic, resisting a call from the United States to restore production more quickly. The price of Brent crude, the global benchmark, rose by more than 40% in 2021 to about $ 72 per barrel.

The US Department of Energy announced last month that it would sell up to 20 million barrels in the aftermath of hurricane Ida, which hit oil production in the Gulf of Mexico and disrupted oil refineries.

Energy Aspects Sen predicted future Chinese auctions to be up to 10m to 15m barrels, adding that the release was “in line with trends in other raw materials.”

“The Chinese government has been very concerned about inflation. [so] They are doing this entirely. They have released a strategic inventory of almost all raw materials. “

Since the beginning of this year, China has stepped up efforts to curb rising commodity prices, which have pushed up all costs from manufacturing to electricity to food.

Over the past two months, the National Food Strategic Reserve administration has held at least three similar auctions for reserves in several metal states, including copper, zinc and aluminum.

Prior to the July 30,000 ton Cooper, 90,000 ton aluminum and 50,000 ton zinc auctions Xu GaopengA Reserve Bureau official told state media that China was able to use its abundant reserves to cool the market.

Brent crude, the international oil benchmark, hit a three-year high in July, surpassing $ 77 a barrel, but the spread of coronavirus delta variants has since raised concerns about fuel demand. Slightly relaxed.

Brent fell slightly after China’s announcement on Thursday, but rose slightly that day, trading at close to $ 73 a barrel.

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Extracted in full from: China to sell oil from state reserves in bid to contain prices – California News Times