- Grades being auctioned include Forties, Murban, Upper Zakum
- Initial reserve sale will be for 7.38 million barrels of crude
China will make the first sale of oil from its strategic reserves on Sept. 24 after announcing the historic move last week, an unprecedented intervention by the world’s top crude importer to lower prices.
The initial auction will be for about 7.38 million barrels of crude, the National Food and Strategic Reserves Administration said in a statement late Tuesday. Grades include Qatar Marine, Forties, Oman, Murban and Upper Zakum, which are in tanks at Dalian and were put into storage last year, the agency said.
Brent oil dipped immediately after the announcement, before recovering to trade near $74 a barrel. The Chinese agency said last week that it would tap its giant oil reserves to “ease the pressure of rising raw material prices.” China is facing the surging cost of commodities, not just for crude, but coal and natural gas, while inflation is rapidly rising.
Companies participating in the auction need to comply with national refinery industry policy and have a sufficient import quota, the agency said. Buyers should also have a good credit record and the crude purchased should be for its own use, not for resale. The volume being sold is less than what China typically imports in one day.
China has built up a 220 million barrel reserve of the commodity over the past decade, according to Energy Aspects Ltd. The buffer differs from strategic petroleum reserves, known as SPR, held in the U.S. and Europe, which are only tapped during supply outages and wars. China however is signaling it’s willing to use its reserve to try to influence the market.
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