America possibly to prohibit state oil trades to China
Date
3/11/2024 6:49:09 AM
(MENAFN) As part of new provisions in budget legislation, China could face a potential ban on purchasing oil from the United States Strategic petroleum Reserve (SPR), as revealed by Congress on Sunday, according to a report by Bloomberg. This development comes in response to heightened concerns over China's access to the SPR, especially after nearly 1 million barrels released from the reserve in 2022 were sold to UNIPEC America, a Houston-based subsidiary of the Chinese state-run energy giant Sinopec.
Established as an emergency stockpile following the Middle East oil embargo of 1973, the SPR currently holds 360 million barrels, nearing a 40-year low due to significant sales in 2022. Lawmakers in Washington are aiming to restrict China's ability to procure crude from the emergency reserve, framing it within a broader strategy to address economic competition with Beijing.
The issue gained prominence in 2022 when, in response to the Ukraine conflict and rising fuel prices, United States President Joe Biden announced the unprecedented sale of 180 million barrels of crude from the SPR. The objective was not only to tackle immediate fuel price concerns but also to replenish the emergency stockpile at lower prices, with the added benefit of stimulating domestic oil production.
This proposed restriction is not the first time the United States has considered limiting SPR sales to Chinese entities. In 2017, during the administration of Donald Trump, the United States sold stockpiled crude to a subsidiary of the Chinese state-owned oil company PetroChina. The United States Energy Department is obligated by law to conduct competitive auctions for oil from the SPR, with the highest bidder securing the purchase, regardless of whether the buyer is a foreign firm.
As the proposal navigates legislative processes, it underscores the evolving dynamics of United States-China economic relations and reflects Washington's strategic considerations in managing critical energy resources. The potential ban on Chinese oil purchases from the SPR introduces a new dimension to the ongoing dialogue surrounding energy security, international trade dynamics, and geopolitical competition in the context of global oil markets.
The outcome of this legislative effort may have implications for broader economic interactions between the two nations.
MENAFN11032024000045015687ID1107960589
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.