[EpochTimesNovember192021](Epoch Times reporter Lin Yan comprehensive report) White House Spokesperson Jen Psaki (Jen Psaki) confirmed on Thursday (November 18) that the United States has discussed alliances with China and other countries The possibility of releasing oil reserves to meet oil demand and curb oil prices.
In answering questions, Psaki said that members of President Biden’s national security team participated in the discussion. She said, “This is an ongoing discussion between us and some partner countries.”
China’s State Bureau of Grain and Material Reserves told the media on Thursday that they are working to release crude oil reserves, but declined to comment on the US request.
This means that China-the world’s second largest oil consumer and largest oil importer-will release crude oil reserves in concert with the United States for the first time.
Reuters was the first to quote sources familiar with the matter to report the news on Thursday.
The report said that the Biden administration in the United States has asked some of the world’s largest oil consumers, including China, India and Japan, to consider releasing oil reserves and coordinating the reduction of global energy prices.
After Reuters reported on the White House discussion, US crude oil and the global benchmark Brent crude oil fell, with the latter falling below $80 per barrel.
Biden seeks multinational cooperation to shift domestic pressure
According to a U.S. source who participated in the discussion, the share of the U.S. release of reserves must exceed 20 to 30 million barrels to affect the market. In the future, it may be released from the U.S. Strategic Petroleum Reserve through sale or borrowing, or both.
The United States is the world’s largest oil strategic reserve country, with more than 600 million barrels of oil reserves.
The United States and allies have coordinated the release of strategic oil reserves before, such as during the 2011 OPEC member Libya war.
But President Biden’s approach is still unusual. He is facing domestic political pressure. Economic activity is rebounding from the trough at the beginning of the epidemic, while gasoline prices and other consumption costs are rising; domestic oil prices in the United States have risen by half since he took office.
The Democratic Party has been losing ground in domestic elections, and the party is worried about affecting the results of the 2022 mid-term elections, asking Biden to show off his political achievements to attract votes.
Biden on Wednesday instructed federal agencies to investigate whether domestic oil price increases involve illegal price increases, targeting US oil giants such as ExxonMobil and Chevron. Although such instructions are usually symbolic, they have shown that Biden has begun to pay attention to people’s livelihood issues.
At the same time, the joint consumer powers to release oil reserves and control global oil prices also reflect the United States’ disappointment with the Organization of the Petroleum Exporting Countries (OPEC) and oil-producing allies because they rejected Washington’s calls for accelerating the increase in supply.
OPEC member countries have been slowly increasing oil production at a rate of 400,000 barrels per day, and gradually canceled oil production cuts after the 2020 Chinese Communist virus (new crown virus, COVID-19) epidemic caused a decline in fuel demand. The Organization of Petroleum Exporting Countries and its oil-producing allies will hold a meeting on December 2 to decide on the production plan for 2022.
Japanese and South Korean officials react indifferently to the release of reserves to lower oil prices
Sources said that in recent weeks, Biden and his senior aides have discussed the possibility of a coordinated release of oil stocks with close allies including Japan, South Korea and India, as well as China.
An official from the Ministry of Economy, Trade and Industry of Japan said that the United States has asked Tokyo to cooperate in responding to high oil prices, but he could not confirm whether this request includes the coordinated release of reserves. The official said that in accordance with the law, Japan cannot release reserves to lower prices.
A South Korean official confirmed that it has received a request from the United States to release oil reserves.
“We are thoroughly reviewing the US request, but we will not release oil reserves because of rising oil prices. We can release oil reserves under unbalanced supply, but not in response to rising oil prices,” the official told Reuters.
Different views on Beijing cooperating with Washington to release oil reserve market
For the first time, China publicly auctioned national crude oil reserves to some domestic refineries in September. At that time, about 7.38 million barrels of reserve crude oil were auctioned and traded, mainly from the Middle East.
Beijing said earlier in November that it would use its national fuel reserves to curb soaring diesel and gasoline prices.
China’s strategic oil reserves are not disclosed to the public. In 2019, the National Energy Administration disclosed that the total reserves including the national reserves, oil companies and commercial oil tanks can maintain the demand for 80 days.
Consulting firm Energy Aspects estimated earlier this year that China’s national oil reserve is about 220 million barrels of crude oil, equivalent to 15 days of demand.
Sengyick Tee, an analyst at the consulting firm Sia Energy, told Reuters: “China has its own plan for the release of the Strategic Petroleum Reserve (SPR). (We expect) the second auction scale should be the same as the first one. similar.”
There are also organizations that are optimistic about this. Citi analysts said in a report on Thursday: “Asia’s spot oil market is still tight…The coordinated release of strategic petroleum reserves (SPR) by countries may have a greater impact, even if only temporarily.”
Editor in charge: Ye Ziwei#