China’s historic decision to stop oil storage | OilPrice.com

For a long time, China’s energy policy was focused on one major and urgent goal – to establish energy security. As the world’s largest importer and second-largest consumer, China is increasingly dependent on international markets to keep its lights on and to keep the industry afloat. A.D. In 2019, heavy About 72 percent of China’s crude oil was imported. This is at least an inconvenient change for Beijing, and President Xi Jinping’s administration has been working to promote greater power.

That is why this week’s dramatic decision by China to sell some of its oil reserves has been a surprise. In April 2020, CNN Business reported: “Excessive dependence on external supply has prompted Beijing to focus on ways to address energy shortages. Increase the amount of oil in reserve. “It is a mystery how much oil Beijing has stored, but the country plans to hold the world’s largest reserves – Strategic Petroleum Storage, Boasts 714 million barrels of authorized storage capacity.

China’s sudden reversal of oil reserves is a response to high energy prices and fuel demand. Some provinces are experiencing power shortages It has been seen in ten years. And that is just the beginning China’s economic crisis. “Inflation is rising, and the country’s producer price index has reached a 13-year high last month due to rising commodity prices,” CNN Business reported this week. The government has warned that high costs such as raw materials such as energy and petrochemical products will exacerbate the growth and employment challenges facing producers.

The demand for oil is not just rising. Together they are China and India Raising global coal prices For extreme weather events. Nikeke Asia reported: “The price of coal in September was $ 177.50 a ton on September 10, more than double the beginning of the year. “The price is approaching the highest level in the last 11 years and the highest in mid-July 2008 to $ 180. Even India is in danger Coal is completely depleted.

Xi Jinping made high-level climate promises and China China has done little to eliminate coal emissions by publicly promising to achieve zero carbon emissions by 2060. The fossil fuels still work More than half The country’s energy mix. Surprisingly Chinese reason Coal cannot give up addiction And Motivation Building clean domestic energy production is based on the same basic principle – energy security.

But China’s best efforts have not yet been enough to get rid of foreign oil and coal – not long shots. As the world economy recovers from the original novel Coronavirus, countries with fast-growing consumer bases, such as China, are facing some major hurdles. Demand for energy, products and services is returning to pre-epidemic levels, but global supply chains and indicators are still not fully renewed.

It is a difficult situation. Many formal options to support the low-income economy, as well The current issue is with China, Left the table. Financial and financial support only aggravates the declining inflation. And then there is the new and urgent issue of the Delta alternative, viz Making major waves Economically from China to the United States. When China sells its precious oil reserves, it is clear that Beijing is between a rock and a solid place – and it will not be out soon.

By Halle Zeremba for Oilprice.com

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