China made an unprecedented intervention in the global oil market, releasing crude from its strategic reserve for the first time with the explicit aim of lowering prices.

The announcement comes amid surging energy costs in China, not just for oil but also for coal and natural gas, and electricity shortages in some provinces that have forced some factories to cut production. Inflation is rapidly rising too, a political headache for Beijing. Oil slumped.

In a late statement on Thursday, the National Food and Strategic Reserves Administration said the country had tapped its giant oil reserves to "to ease the pressure of rising raw material prices." It didn't offer further details, but people familiar with the matter said the statement referred to millions of barrels the government offered in mid-July.

The Chinese stockpiling agency also said a "normalized" rotation of crude oil in the state reserves is "an important way for the reserves to play its role in balancing the market", indicating that it may continue to release barrels. The agency said that putting national reserve crude oil on the market through open auctions "will better stabilize domestic market supply and demand".

No one answered calls to the press offices of China's State Council and the National Development and Reform Commission seeking comments outside the regular business hours.

China is the world's largest oil importer and over the past decade has built a huge reserve of the commodity. The buffer differs from strategic petroleum reserves, known as SPR, held in the U.S. and Europe, which are mostly only tapped during supply outages and wars. China however is signalling it's willing to use its reserve to try to influence the market.

"On its face, it's a pretty clear statement of an intent to use the SPR to dampen oil prices for domestic refiners," said Bob McNally, a former senior White House policy adviser who now runs Rapidan Energy Group, a consulting firm in Washington.

The statement comes after China's factory-gate inflation accelerated to a 13-year high, and just a month after the White House publicly asked the OPEC oil cartel to pump more crude amid rising gasoline prices in America. Together, the actions in Beijing and Washington suggest that the world's two largest energy consumers see $70-$75 a barrel as a red line for the price of oil. Hurricane Ida has also eliminated a swath of U.S. crude production, affecting supplies to China's Unipec.

Brent crude fell as much as $1.36 a barrel to $71.24 in London, erasing earlier gains. West Texas Intermediate had a similar reversal.
China has been selling other commodities from its strategic reserves, including copper, aluminum and grains. In the past, Beijing rarely confirmed the releases, which have tended to filter into the market via trader talk. The public release is being seen by many as an attempt to maximize the impact of the move.

Thursday's statement started by saying the release was carried out "with the approval of the State Council," language that Chinese researchers took as an indication that it was directed by China's most senior political leaders.

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China's "economy" is a house of cards .... unfortunately we are well on our way there also

Quoted:Curious.


Has China made similar moves before?

China's state reserves administration said on Friday it would sell off a total 150,000 tonnes of its strategic metal stockpiles via public bidding on Sept. 1, in the third round of auctions aimed at cooling high prices.


The National Food and Strategic Reserves Administration said in three separate notices it would auction 30,000 tonnes of copper, 50,000 tonnes of zinc and 70,000 tonnes of aluminium.

The rare series of state reserve sales has so far seen a total of 270,000 tonnes of the three metals released. The last auction on July 29 saw the administration sell 170,000 tonnes of metal, including 90,000 tonnes of aluminium.

Almost 4,600 tonnes of the aluminium on offer dates back to the 1970s, having entered storage in 1975-76 after being produced in Canada, Australia, France and - in the case of a tiny batch of 0.89 tonnes - West Germany.


The oldest zinc being sold entered storage in 1983 and the oldest copper in 1981.

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They either expect deflation or they're in danger of collapsing due to market pressures. My guess is the latter.

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It seems so much like the mid 1930s.  The question for me is, will China move toward war in an effort to escape economic implosion?  Will they have time?  The best thing for the world right now would be for the Chinese economy to implode.  Yeah, no more cheap shit...  But the CCP would lose it's 'mandate of heaven' and the party might finally lose it's grip on power.  Then they would lose finally lose their hold on the rest of the world.

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Would they be selling strategic reserves if planning for war?

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Meh what percent of the reserves is it?

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Would they be selling strategic reserves if planning for war?

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Nothing they do is good. Start there and work forward.

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It seems so much like the mid 1930s.  The question for me is, will China move toward war in an effort to escape economic implosion?  Will they have time?  The best thing for the world right now would be for the Chinese economy to implode.  Yeah, no more cheap shit...  But the CCP would lose it's 'mandate of heaven' and the party might finally lose it's grip on power.  Then they would lose finally lose their hold on the rest of the world.

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"Unprecedented"  Just started this summer.  Some of the auctioned metal has been in storage for 46 years.

Reuters, August 2021

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There was a story on Youtube that the CCP has taken funds meant for China's retiredment system, and used it to fund the "Belt & Road Initiative," and some of the 3rd world countries participating in the BRI are in default because the Chinese lent them money that can't be repaid.

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There was a story on Youtube that the CCP has taken funds meant for China's retiredment system, and used it to fund the "Belt & Road Initiative," and some of the 3rd world countries participating in the BRI are in default because the Chinese lent them money that can't be repaid.

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Nothing they do is good. Start there and work forward.

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Oh boy.

The last time they did something like this the Qing dynasty collapsed

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Any war would probably be pretty short.  Short enough that they would probably not need to replace destroyed equipment while they were still fighting.

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I saw this article a couple weeks ago and it's been bothering me.  "To ease the pressure of rising raw material prices"  Or to raise money?  To hold on to dollars for the Evergrande bonds by substituting paid for strategic oil for oil imports that would have to be purchased with dollars?  Second thought, no country that relies on oil and food imports sells strategic oil and food reserves, plus strategic metals like copper and aluminum, if they're planning on a war in the near term.  

Didn't work to reduce the price of oil BTW, oil is up a little bit since then.

https://www.aljazeera.com/economy/2021/9/9/china-sells-oil-reserves-to-lower-prices-in-unprecedented-move

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They either expect deflation or they're in danger of collapsing due to market pressures. My guess is the latter.

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Fuck no you don't want that kind of collapse!

For prc China to have complete economic disintegration like that in this day and age would bring down the entire world's economy with them and cause a world depression probably twice as worse as the 1930s

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Going out of business sale?

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Because they plan on buying it back at a lower price?

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Wasn’t it just reported that Pelosi just bought $1,000,000 in evergrande bonds Monday?

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Fuck no you don't want that kind of collapse!

For prc China to have complete economic disintegration like that in this day and age would bring down the entire world's economy with them and cause a world depression probably twice as worse as the 1930s