The world’s top oil importer, China, has started to release more than 20 million barrels of crude oil from its strategic reserve in a move seen as seeking to curb the recent oil price rally, Energy Intelligence reported this week, quoting trading sources.
The reported release from the strategic petroleum reserve is also aimed at putting inflation under control.
Various market and trade sources told Energy Intelligence that China was about to release the equivalent of between 22 million barrels and over 29 million barrels, or between 3 million and 4 million tons.
Sources with knowledge of China’s plans also told Bloomberg that the government had supplied to refiners earlier this month 22 million barrels of crude oil.
The crude from the strategic reserve being supplied to Chinese refiners would displace part of the crude oil imports of the world’s top oil importer.
China’s crude oil imports began to cool off as prices rallied. Now, its crude released from the strategic reserve could weaken Chinese imports further.
China’s crude oil imports fell to around 9.77 million bpd in June, down by 2 percent on May and the lowest monthly level since the start of the year, customs data cited by Reuters showed last week.
Over the first half of the year, China imported 260.66 million tons of crude, or 10.51 million bpd per Reuters estimates. This was a 3 percent drop compared to the first half of 2020. The first-half figure was boosted by increased imports by independent refiners.
Since the first quarter, however, Beijing has begun cracking down on the teapots, as production of fuels both at independent refiners and state-owned majors was rising faster than demand, undermining refining margins and creating a glut.