China Ambiguous on U.S.-Coordinated Strategic Petroleum Release
(Bloomberg) -- China has been ambiguous in its position over a U.S.-coordinated release of strategic oil reserves, although the country is named as one of the participants in American-led efforts to cool off prices.
“China is maintaining close communication with relevant parties, including oil consuming and producing countries, to ensure long-term stable operation of the oil market,” Foreign Ministry spokesman Zhao Lijian said at a briefing in Beijing on Wednesday in response to questions. He added that the nation had noted recent actions taken by major oil-consuming countries on reserves.
The U.S. said Tuesday it will release 50 million barrels of crude from its strategic reserves in concert with China, Japan, India, South Korea and the U.K. -- an unprecedented, coordinated attempt by the world’s largest oil consumers to tame prices. So far, the Japanese, Korean, U.K. and Indian governments have confirmed the joint action.
“China will arrange the release of national reserve oil based on its own reality and needs, on top of other measures to maintain market stability and promptly publish relevant information,” Zhao said, emphasizing the country has been committed to ensuring the security of its own energy supply for a long time, by establishing an independent and complete national oil reserve system.
When asked whether its position on a crude oil reserve release is a response to the U.S. call, Zhao said that as one of the world’s major oil producers and consumers, China has long attached great importance to the stability of the international oil market and “is willing to strengthen cooperation with all relevant parties to respond to challenges together.”
While the government’s official stance is ambiguous, a nationalist tabloid newspaper -- the Global Times -- seemed to indicate in an editorial Wednesday that China had signed up to the coordination. “Lower oil prices will do China good, and it’s believed that Beijing will not act in opposition to Washington on the issue of an SPR release.” The newspaper is sometimes used by authorities to disclose some information.
China said last week it’s releasing some oil from its strategic reserves days after the U.S. invited it to participate in a joint sale, although the country didn’t make clear whether this was a prior plan or was in response to a U.S. invitation. No one answered calls or a fax to the National Food and Strategic Reserves Administration on Wednesday.
“Beijing will delay confirming a release to separate its actions from the U.S. announcement,” Energy Aspects analysts including Amrita Sen wrote in an emailed note on Tuesday. The London-based consultant has been expecting China to announce another round of auctions of up to 15 million barrels before the year-end, which will also need to be repaid within 90 days.
The Asian nation tapped its national stockpiles multiple times this year in an effort to reduce domestic crude oil prices. In September, the reserve bureau held its inaugural public auction where it offered 7.4 million barrels, or the equivalent of less than a day’s worth of Chinese imports. The country also made a private sale from its reserves prior to the auction.
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