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China will hold the first auction of crude from its strategic reserves on September 24, launching the unprecedented sale of oil from the national stockpiles it announced last week in a bid to “alleviate raw material price pressures.”
The Chinese authorities will auction 7.38 million barrels of bonded crude oil at the end of this month, the state reserves administration said on Tuesday, as carried by Reuters.
China said last Thursday that it planned to auction crude oil from its strategic reserves, aiming to ease oil prices and inflationary pressure. The Chinese announcement led to a slump in oil prices that day. Last week, it was not clear how much oil China would auction.
Today, the state reserves administration detailed in a notice carried by Reuters how much crude the first round of sales would contain.
According to the administration, China will auction several crude grades in five different batches on September 24. It will sell 951,137 barrels of Marine crude from Qatar, nearly 1.1 million barrels of the Forties Blend from the North Sea, over 1.79 million barrels of Oman crude, more than 2.95 million barrels of the Murban crude grade from Abu Dhabi, and 592,031 barrels of the Upper Zakum crude variety, also from Abu Dhabi.
Bidders who buy the crude at the auction cannot re-sell it, the Chinese administration said. They should also comply with the state refining industry policy and have enough crude oil import quotas to buy the bonded crude, the administration added.
Commenting on global oil supply in its Oil Market Report today, the International Energy Agency (IEA) said that China and the U.S. are tapping strategic crude reserves this month. The United States has loaned barrels from the SPR to refiners in the U.S. Gulf Coast to help offset crude supply losses from Hurricane Ida.
China, “For the first time ever, it will sell oil from state-owned tanks in an effort to dampen domestic oil prices and inflationary pressures,” the IEA said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.