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US could ban state oil sales to China – Bloomberg

The measure has been proposed in a funding bill unveiled by lawmakers in Washington

China could be banned from buying oil from the US Strategic Petroleum Reserve (SPR) under new provisions in budget legislation unveiled by Congress on Sunday, Bloomberg has reported.

Lawmakers in Washington are seeking to prevent China from purchasing crude from the emergency reserve as part of a broader effort to address competition with Beijing, the outlet said.   

The issue of SPR sales to China heated up after nearly 1 million barrels released from the oil reserve in 2022 were sold to UNIPEC America, a Houston-based subsidiary of Chinese state-run energy giant Sinopec.  

In 2022, US President Joe Biden announced the sale of a record 180 million barrels of crude from the SPR in an effort to tame rising fuel prices amid the Ukraine conflict. The idea was to buy back oil at lower prices to refill the emergency stockpile, with the dual effect of spurring domestic oil production. 

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It was not the first time the US had sold oil from the strategic reserve to a Chinese company. The administration of Donald Trump sold some stockpiled crude to a subsidiary of Chinese state-owned oil company PetroChina in 2017. The US Energy Department is required by law to sell oil from the SPR in a competitive auction to the highest bidder, regardless of whether the buyer is a foreign firm.   

The SPR is an emergency stockpile created following the Middle East oil embargo of 1973, when some oil-producing countries temporarily halted crude shipments to the US. It currently stands at 360 million barrels, close to a 40-year low due to sales in 2022.  

The move to bar oil sales to China is merely a political stunt and will have little to no impact as Beijing’s reliance on American imports is low, experts claim.    

In January 2023, the US House of Representatives passed a bill with language similar to current government-funding legislation, barring SPR sales to Chinese state entities. That bill, however, was not taken up by the Senate.

For more stories on economy & finance visit RT’s business section

March 05, 2024 at 07:32PM

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