Beijing's intention to sell its crude oil was unveiled earlier in September by the National Food and Strategic Reserves Administration, but without providing any details on the time or the amount of barrels to be sold.
China will be auctioning some 7.38 million barrels of oil from its national reserve, with the bidding slated for 24 September, according to the recent statement by the National Food and Strategic Reserves Administration.
Beijing will be offering many sorts of oil, including batches of Qatar Marine crude, Oman crude, Murban and Upper Zakum. The administration noted that bidders will have to comply with the national refining industry policy and have sufficient import quotas to take the bonded crude. Additionally, the resale of the volumes purchased at the auction will not be allowed.
China said it would hold the auction in September, marking the country's first public announcement of the state reserve crude oil sale. According to Beijing, the auction “will better stabilise domestic market supply and demand”.
The statement comes in light of US President Joe Biden
urging OPEC+ to step away from the pandemic-induced oil production cuts, which were caused by the plummeting demand prompted by the coronavirus
. Biden also cited concerns for domestic markets, saying that the step will make gasoline prices more affordable to Americans. US crude production was also impacted by Hurricane Ida that ravaged the country's south in late August.
OPEC, however, said in its monthly report that it estimates world oil demand will decrease due to the Delta coronavirus
variant, expecting it to be some 99.70 million barrels per day (bpd) in the fourth quarter of 2021, down 110,000 bpd from last month's forecast.
China, the world's biggest oil importer, is not the only country to have announced state reserve oil auction. Back on 24 August, the United States also said that it plans to hold a Gulf of Mexico auction as soon as October.
Amid Beijing's announcement, along with the tight US supplies, oil prices jumped to six-week-high, with WTI Crude up 0.77% at $71.02 and the price for Brent Crude eclipsing $74 a barrel, up by 0.78% at $74.11 as of Thursday.