By John Ikani
China will release crude oil from its national strategic stockpiles around the Lunar New Year holidays that start on Feb. 1 as part of a plan coordinated by the United States with other major consumers to reduce global prices.
The move according to Reuters, was revealed by insiders with knowledge of conversations between the world’s top two crude users.
The agreed-upon reserve release is the outcome of a series of talks between the Biden administration and other major oil consumers in November after tight supplies drove global oil prices to multi-year highs.
The sources said China agreed in late 2021 to release an unspecified amount of oil depending on price levels.
“China agreed to release a relatively bigger amount if oil is above $85 a barrel, and a smaller volume if oil stays near the $75 level,” said one source, without elaborating.
According to the source, China will release crude stocks around the Lunar New Year. From January 31 to February 6, China will be closed for the most important annual holiday.
The US has conducted crude swaps and sales from its reserves over the last two weeks, while Japan and South Korea have also announced crude sales plans.
In September, China held its first-ever public crude reserves auction, selling around 7.4 million barrels, or about half a day’s use in the country. China has traditionally kept the details of its state reserves hidden.
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Supply problems in Libya and Kazakhstan, a drop in US crude stocks to their lowest level since 2018, and an improvement in the forecast for gasoline demand in Europe as governments lift COVID-19 regulations sent oil prices beyond $80 a barrel this week.
Benchmark Brent crude futures was at $86.06 a barrel and U.S. West Texas Intermediate crude at $82.12 a barrel as of Saturday.
In November, the National Food and Strategic Reserves Administration said it was “working on” a release of crude reserves, but declined to comment on the U.S. request for the coordinated release among buyers.