© Reuters. File picture: On October 15, 2019, a China Ocean Shipping Company (COSCO) ship was seen near the oil tank of the China National Petroleum Corporation (CNPC) Dalian Petrochemical Company in Dalian, Liaoning Province, China. REUTERS/Stringer.
Authors: Yew Lun Tian, Ahmad Ghaddar and Olesya Astakhova
Beijing (Reuters)-As the world’s largest crude oil importer, China has not stated whether it will release oil from its reserves as required by Washington, while OPEC sources say that US actions have not changed the direction of the producer organization .
On Tuesday, the administration of US President Joe Biden announced plans to release https://www.reuters.com/markets/commodities/us-set-unveil-emergency-oil-release-bid-fight-high-prices-2021-11-and Other major consumer countries, including China, India, and Japan, have cooperated to extract 23 million barrels of oil from strategic reserves in an attempt to cool oil prices.
The United States has made the biggest promise to provide 50 million barrels of pre-approved sales to the market and provide loans to the market, but without China, the impact of this action will be small.
After China said on Wednesday that it was working to release its reserves, Beijing made no further announcement on Thursday, confirming Reuters’ report last week that China will release oil as needed.
On Tuesday, Biden said at a briefing that China “may do more.”
Rumors of coordinated action pushed crude oil prices lower before the US announcement, but due to Washington’s confirmation that it would use its strategic reserves and the lack of clarity on the market’s intentions with China, the international market rose by more than 3% on Tuesday.
The market is also keen to see OPEC’s next move, because Washington’s statement sparked speculation that OPEC and its allies (collectively referred to as OPEC+) might respond.
However, three sources told Reuters that the organization did not consider suspending its current agreement to increase production by 400,000 barrels per day per month, which some consumer countries believe is too slow.
Fuel demand collapsed at the beginning of the pandemic, but reappeared this year, and rising oil prices triggered broader inflation.
Biden faced low approval ratings before next year’s congressional elections, and he was frustrated after OPEC+ dismissed his repeated requests to increase oil production. US retail gasoline prices rose by more than 60% last year, the fastest increase since 2000.
On Thursday, at 1000 GMT, it fell 31 cents to US$81.94 per barrel.
Rystad senior oil market analyst Louise Dickson said on Wednesday: “The market seems to believe that OPEC+ will maintain oil balance rather than the short-term nature of the SPR release.”
OPEC+, including Saudi Arabia and other US allies in the Gulf region, as well as Russia, will meet again on December 2 to discuss policy.
Iraqi Oil Minister Ihsan Abdul Jabbar (Ihsan Abdul Jabbar) said on Wednesday that the organization is monitoring the balance of the oil market and that the organization needs to study the latest data before it can make a supply decision.
The producing countries are already working hard at https://www.reuters.com/markets/europe/us-wants-more-oil-opec-cant-turn-tap-much-harder-2021-11-23 to reach the current goal, they There is also concern that the resurgence of COVID-19 cases may again depress demand.
Washington’s efforts to lower energy prices in cooperation with major Asian economies are a warning to OPEC+ to control crude oil prices that have risen by more than 50% so far this year.
In the past, the release of multinational reserves was coordinated by the Paris-based regulator International Energy Agency (IEA). The IEA will not intervene to affect prices, but the head of the agency said on Wednesday that some producers have been excessively restricting supply.
“Some of the key pressures in today’s market may be considered artificial tension…Because in today’s oil market, we see that nearly 6 million barrels of idle capacity per day lies in the major producing countries OPEC+ countries,” IEA is responsible Fatih Birol (Fatih Birol), said.
According to the plan, the United States will release 50 million barrels, which is equivalent to about 2-1/2 days for domestic demand. However, some analysts say the structure released by the United States — a combination of 18 million barrels of pre-approved sales and 32 million barrels of loans — is too small and temporary.
Goldman Sachs (NYSE:) said the announced trading volume was “a drop in the ocean.” [O/R]
It is expected that the impact of the sale of strategic reserves will be felt first in the United States and then in Asia https://www.reuters.com/article/global-oil-reserves-usa-idCNL1N2SG0A0.