China on board with oil release, but wants to show independence

China’s ambiguity on whether it will join the U.S.-led coordinated release of oil reserves is aimed at a domestic audience to show Beijing isn’t following Washington, according to government officials involved in the discussions.

The world’s biggest oil importer is committed to drawing crude from its stockpiles along with the U.S., Japan, South Korea, India and the U.K., the officials said, asking not to be identified discussing a private matter. Beijing want to ensure that a release is seen as independent, and the public don’t misconstrue the cooperation as taking orders from Washington, they said.

China said late last week that it was working on a sale of oil from its national reserves, just days after a virtual summit between Presidents Xi Jinping and Joe Biden at which the matter was discussed.

However, a foreign ministry spokesman seemed to equivocate when asked about the matter at a briefing on Wednesday. “China is maintaining close communication with relevant parties, including oil consuming and producing countries, to ensure long-term stable operation of the oil market,” he said. 

There will still be a reserves sale from China, but it will be done on Beijing’s schedule and may not be at the same time as the other nations, the officials said.  China is willing to coordinate with other countries, including the U.S., to ensure supplies and prices globally as well as at home are stable, albeit in an independent and equal way, they said.

China, which is still grappling with a wider energy shortage as temperatures cool, has already sold oil from its national stockpiles twice this year. In September, the reserve bureau held its inaugural public auction where it offered 7.4 million barrels, or less than a day’s worth of imports. The country also made a private sale from its reserves several months before the auction. 

There’s been no official word on how big China’s release might be. Local industry consultant JLC said it was likely to be at least 7.3 million barrels, citing unidentified people familiar with the market. That would be relatively small given the size of China’s economy, comparing with 50 million barrels from the U.S. and an estimated 10 to 20 million barrels from the other participating nations.

© 2021 Bloomberg L.P.

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