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Oil price: China wants to tap into its reserves

2021-11-18T09:51:28.051Z

In the face of soaring energy prices, China's government has announced the release of crude oil reserves. The US government is apparently considering similar steps. The oil market reacts with losses.



Enlarge image

Petrol station in Beijing (archive image)

Photo: JASON LEE / REUTERS

The Chinese government is preparing to tap the state oil reserves because of the high prices.

"We are working on releasing crude oil reserves," said a spokeswoman for the competent authority on Thursday.

At the same time, she announced that she would publish a statement on this later.

China, the world's largest oil importer, last used state reserves in September and auctioned 7.38 million barrels to domestic refineries.

The People's Republic keeps the level of its strategic reserves a secret. The last public update was in 2019, when the National Energy Administration announced that the country had oil reserves that should last for 80 days. Consulting firm Energy Aspects estimated earlier this year that China's reserves hold about 220 million barrels of crude oil, which would equate to 15 days of demand.

According to information from the Reuters news agency, the US government has spoken to China and other countries about tapping parts of their respective oil reserves. Such a coordinated move would aim to push oil prices down and stimulate economic growth, said several people familiar with the matter. The talks have been held in the past few weeks with China, Japan, South Korea and India and have not been concluded. There is also no final decision as to whether such a step will take place.

The US Presidential Office did not want to comment on the content of the talks with other large energy-consuming countries, which have been repeatedly confirmed in the past. President Joe Biden had called on the production cartel Opec and allied producers such as Russia several times to expand their oil production more quickly.

Biden could use the so-called Strategic Petroleum Reserve (SPR), which the USA had created during the oil price crisis in 1975.

It currently comprises 606 million barrels stored at two heavily guarded locations in Louisiana and Texas.

In the past, US presidents used the SPR during wars or after the destruction of oil production facilities by hurricanes.

In addition to the USA, 29 other member countries of the International Energy Agency (IEA) have to hold reserves.

After the USA and China, Japan has one of the largest inventories.

Oil prices drop to monthly lows

Investors have already reacted to the reports about a possible use of reserves.

On Thursday night, North Sea oil and US crude oil prices fell to one-month lows.

In the morning a barrel (159 liters) of North Sea Brent cost 79.86 dollars.

That was 42 cents less than the day before.

The price of a barrel of the US WTI variety fell 76 cents to $ 77.66.

Most recently, oil prices had already drifted somewhat from their multi-year highs marked in October.

Large consumer countries such as the USA and China are particularly interested in low oil prices.

For weeks it has been speculated that the US could throw part of its strategic oil reserve onto the market in order to depress prices.

According to media reports, US President Joe Biden discussed the matter with China's President Xi Jinping this week.

dab / Reuters / dpa

Source: spiegel

All business articles on 2021-11-18

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