China, the world’s largest crude importer, was non-committal about its intentions to release oil from its reserves as requested by the United States (US), while OPEC producers were not considering changing tactics in light of the US action, according to three sources in the group.
On Tuesday, US President Joe Biden’s administration announced plans to release millions of barrels of oil from strategic reserves in coordination with other large consuming nations, including China, Japan and India, to try to cool prices.
The US has made the largest commitment for a reserves release at 50 million barrels of pre-approved sales along with loans to the market, but without China, the action is considered less dramatic.
On Wednesday, China said it was working on its own reserves release. The announcement confirmed a Reuters report last week that China was working on its own timeline.
On Tuesday, Biden had told a briefing that China “may do more.” Crude oil prices had been falling for several days on rumors of a coordinated action, but oil prices jumped 3% on Tuesday as Washington tapped its strategic reserve but the market lacked clarity on China’s intentions.
Washington’s move raised speculation that the Organisation of the Petroleum Exporting Countries (OPEC) and allies, collectively known as OPEC+, might consider pausing its current agreement to boost output by 400,000 barrels per day every month, but the group is not considering that, three sources told Reuters.
Fuel demand cratered early in the pandemic but has come roaring back this year, and oil prices have surged. Biden, facing low approval ratings ahead of next year’s congressional elections, has grown frustrated at OPEC+ shrugging off his repeated requests to pump more oil.
Published in The Express Tribune, November 25th, 2021.
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