America possibly to prohibit state oil trades to China
(MENAFN) In a move that could escalate tensions between the United States and China, Congress has unveiled provisions in budget legislation that may lead to a ban on China buying oil from the United States Strategic petroleum Reserve (SPR), according to a report by Bloomberg on Sunday. The controversy surrounding SPR sales to China intensified after nearly 1 million barrels were sold to UNIPEC America, a Houston-based subsidiary of the Chinese state-run energy giant Sinopec, from the oil reserve in 2022.
Established as an emergency stockpile following the 1973 Middle East oil embargo, the SPR currently holds 360 million barrels, approaching a 40-year low due to significant sales in 2022. Lawmakers in Washington are now pushing for measures to prevent China from procuring crude from the emergency reserve, citing broader concerns about competition with Beijing.
The initiative to restrict China's access to the SPR is part of a more comprehensive effort by United States lawmakers to address economic competition and strategic interests with China.
The move comes in the aftermath of the 2022 decision by President Joe Biden to sell a record 180 million barrels of crude from the SPR to stabilize rising fuel prices amid the conflict in Ukraine. The strategy aimed to repurchase oil at lower prices to refill the emergency stockpile while encouraging domestic oil production.
This is not the first instance of the United States selling oil from the strategic reserve to a Chinese company. During the administration of Donald Trump in 2017, crude from the SPR was sold to a subsidiary of the Chinese state-owned oil company PetroChina. The process follows a legal requirement by the United States Energy Department to conduct competitive auctions, selling oil to the highest bidder, irrespective of whether the buyer is a foreign firm.
The proposed ban on China's access to the emergency oil reserves raises questions about the intersection of economic policy, energy security, and geopolitical considerations. As the United States grapples with balancing domestic interests and international relations, the outcome of these deliberations could have significant implications for the global energy landscape and diplomatic relations between the world's two largest economies.
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