China is preparing to release crude oil from its strategic reserve, Reuters has reported, citing the country's National Food and Strategic Reserves Administration.
The news comes on the heels of reports that President Biden has asked China and other large consumers to do just that in an attempt to arrest the climb of oil prices.
However, Reuters notes that the Chinese National Food and Strategic Reserves Administration declined to comment on these reports, suggesting the move may have been planned before President Xi Jinping's virtual meeting with Joe Biden, which is when Biden first raised the issue.
"We are carrying out the work of releasing crude oil reserves. And for any details related to the releasing, we will put out a statement on our website," a spokeswoman for the NFSRA told Reuters.
"We will release more details on the volume of oil and date of its sale on our website in due time, just like we did in the first public auction," the spokeswoman told Bloomberg.
Earlier this week, Reuters reported, citing unnamed sources, that besides China, the Biden administration had also approached Japan, India, and South Korea with the suggestion they release crude oil from their strategic reserves.
The oil auction announced by the National Food and Strategic Reserves Administration would be the second one: in September, the authorities auctioned 7.4 million barrels of crude for sale. The news did weigh on oil prices but only for a short while before prices rebounded again.
Then, earlier this month, Beijing also ordered the release of gasoline and diesel as the prices of fuels in some parts of China were rising too fast.
"China has its own plan for the strategic petroleum reserve (SPR) releases. (We expect) the second release volume should be similar to the first one," SIA Energy analyst Sengyick Tee told Reuters.
By Irina Slav for Oilprice.com
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Even releasing 100 million barrels (a 1-day global consumption) will hardly impact global oil supplies and prices. It is far better to let the market take its course.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London