China’s National Food and Strategic Reserves Administration on Thursday said it would auction off state crude oil reserves in phases to help domestic refiners facing high feedstock costs. The agency said the public auction would target integrated refining and chemical plants. This indicates that independent refiners, known as “teapots,” may not be able to participate. The NFSRA also said that the sales of crude reserves should guarantee the country’s energy security but did not disclose the volume of crude it would release and the timeline.
The announcement came amid China’s broader measures to cool down soaring commodity prices and ease the pressure of high raw material costs on manufacturers. In August, China’s factory-gate inflation hit a 13-year high. Brent prices have climbed 40% since the beginning of 2021 amid improving energy consumption after a pandemic-induced demand collapse in 2020.
China keeps its strategic petroleum reserve (SPR) secret, but analysts estimate that it could amount to 220 million barrels, about 15 days of demand. Analysts also expect the NSFRA to release 10-15 million barrels of crude at a time via the auction.
