China joins the United States and other countries in exploiting emergency oil reserves

The White House announced on Tuesday that the United States will release about 50 million barrels from its strategic oil reserve and that China, Japan, India, South Korea and Britain will participate in the coordinated move.

According to the International Energy Agency, which monitors global oil supplies on behalf of the world’s leading economies, there have been three coordinated inventory releases since its inception: before the Gulf War in 1991, after Hurricanes Katrina and Rita damaged oil facilities in the Gulf of Mexico in 2005, and in response on supply disruptions caused by war in Libya in 2011.

“We recognize that the rise in oil prices places a burden on consumers and has increased inflationary pressures at a time when the economic recovery remains uneven and faces a number of risks,” the IEA said in a statement. The Paris-based agency was not involved in the US-led initiative.

The coordinated attempt to lower prices follows a decision by OPEC + to ignore calls to speed up the pace at which the group is restoring supplies cut at the top of the pandemic.

Key details of market intervention remain unclear, including the exact amounts that some large countries will contribute, but here’s what we know so far about what other countries are doing:

China

“China will arrange the release of state crude oil reserves in light of the situation and needs and take other necessary measures to maintain stability in the oil market,” Chinese Foreign Ministry spokesman Zhao Lijian said at a briefing on Wednesday.

“China has long placed great emphasis on the stability of the international oil market and we are ready to maintain communication with relevant parties to maintain market balance and long-term stability,” he added.

The world’s second largest economy and largest importer of oil told CNN on Friday that it was working on a strategic oil release. A spokesman for China’s National Food and Strategic Reserves Administration confirmed that China had already released an unknown amount of oil to keep industry costs under control.

China does not publish a lot of data on its oil reserves, but said in 2017 that it had established nine large reserve bases around the country, with a total capacity of 37.7 million tonnes.

Japan

Japanese Prime Minister Fumio Kishida confirmed on Wednesday that Japan would release oil from its state reserves.

“We have worked with the United States to stabilize the international oil market,” he told reporters, adding that the country would take the step in a way that does not violate oil storage laws.

Kishida said stabilizing crude oil prices is crucial to help the economy recover from the coronavirus pandemic. He said more details about the timing and amount of oil will be announced at a later date.

Japan had 388 million barrels of total strategic crude oil inventories in June 2020, according to the U.S. Energy Information Administration. It said about 76% of these were government stocks and about 24% were commercial.

The prospect of the US and other major energy consumers releasing emergency barrels has already helped deliver lower oil prices, at least in the short term. After peaking at $ 85 per barrel in late October, US oil prices have fallen about 10%. This in turn has helped to put a lid on rising petrol prices.

India

India has agreed to release 5 million barrels to be timed in agreement with the other five nations.

“India has repeatedly expressed concern that the supply of oil has been artificially adjusted below the level of demand by oil-producing countries, leading to rising prices and negative consequences,” the Indian government said in a statement shortly after the White House statement.

It said several Indian state governments had already taken “difficult steps” to cut local fuel taxes.

“Despite the high fiscal burden on the government, [they] was taken to provide relief to the citizens, “it added.

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South Korea

The South Korean government said in a statement that the amount and timing of the release of the oil reserves would be decided through consultation with the other countries, but said it was expected to be at a level “similar to previous international cooperation cases.”

During the Libyan crisis in 2011, when the civil war disrupted global oil supplies by taking up to 1.8 million barrels a day offline, South Korea released nearly 3.5 million barrels or about 4% of the country’s oil reserves.

“The South Korean government decided to participate in the US proposal to release oil reserves after taking into account the need for international cooperation in the recent sharp rise in international oil prices, the importance of [South Korea]”The United States Alliance and the participation of major countries,” it said in a statement from its foreign ministry.

The United Kingdom

The UK government said in a statement that it would allow companies to “voluntarily release” oil reserves of up to 1.5 million barrels, in what it called “a sensible and measured step to support global markets once we emerge from the pandemic” . “

“As we have said before, we will work closely with our international partners to do what we can to support the global economy through the post-pandemic transition,” a government spokesman said.

—CNN’s Beijing Bureau, Manveena Suri, Emiko Jozuka, Junko Ogura, and Yoonjung Seo contributed to this report.

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