Why did the US draw on strategic oil reserves to sell it to China?
The Biden administration has sold nearly 6 million barrels of oil taken from the strategic reserve to Unipec America, the US trading arm of the Chinese state oil company Sinopec. The article by Giuseppe Gagliano
The Biden administration has sold nearly 6 million barrels of oil taken from the strategic reserve to an entity linked to the Chinese Communist Party.
From September 2021 to July 2022, the Department of Energy (DOE) awarded three crude oil contracts worth approximately $ 464 million to Unipec America, the US trading arm of the Chinese state oil company Sinopec. The sale would touch 5.9 million barrels in total from the strategic reserve (SPR) to be exported to the Chinese company. The latest contract, revealed on July 10, was for 950,000 barrels sold for approximately $ 113.5 million.
The two most recent sales to Unipec resulted from an emergency withdrawal of US oil stocks, initiated under President Joe Biden on March 31 to offset the loss of Russian oil in global markets and control rising fuel costs at home.
Unipec contracts have come under heavy criticism in recent weeks, especially due to the company's ties to President Biden's son.
The oil auction is competitive in terms of price, which means that contracts are awarded to the highest bidder . Unipec has secured 1.9 million barrels in the last three months through two contracts which it won on April 21 and July 10.
The DOE also sold 4 million barrels to Unipec last fall during a congressional-mandated sale.
Sales at Unipec appear to fall in the lower price range among buyers. For the 2021 contract, Unipec paid about $ 63 per barrel, about $ 7 less than the trading price at the time and more than $ 2 below the highest price of other buyers in the sale.
The Strategic Petroleum Reserve is the world's largest supply of emergency crude oil, with four storage sites in Texas and Louisiana designed to alleviate significant oil supply shortages in times of major geopolitical events or natural disasters.
The amount of oil in the SPR has seen a steep decline in the past year, particularly since Biden, blaming the Russian war in Ukraine for "rising pump prices," in March ordered a withdrawal at a rate of 1. million barrels a day for six months to curb gas prices. The planned sale of approximately 180 million barrels marked the largest drawdown in the reserve's history in more than four decades and is set to reduce the supply of US reserve oil by about a third.
China is the world's largest oil importer. As the West moves away from Russian oil due to the war in Ukraine, China has amassed Russian resources at deep discounts. From March to June, it spent more than $ 25 billion on Russian oil, gas and coal, nearly doubling the amount from the previous period, the latest customs data show. The sales volume prompted Russia to become China's top oil supplier for two consecutive months since May, displacing Saudi Arabia.
On July 20, 20 Republican members of the House Oversight and Reform Committee wrote to Secretary of Energy Jennifer Granholm asking for an immediate briefing and all documents relating to the administration's decision to sell US oil reserves. They noted that Sinopec, Unipec's parent organization, has been linked to President Hunter Biden's son, through Chinese state-backed private equity firm BHR Partners, which became a Sinopec stakeholder in 2014.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/perche-gli-usa-hanno-attinto-alle-riserve-strategiche-di-petrolio-per-venderlo-alla-cina/ on Mon, 01 Aug 2022 04:35:34 +0000.