US President Joe Biden asked his Chinese counterpart Xi Jinping about the possibility of the joint release of the countries’ oil reserves to try to ease global energy prices at their virtual meeting on Monday, the South China Morning Post has reported, citing a source said to be familiar with the discussion.
A White House readout of Monday’s conversation confirmed that Biden and Xi “discussed the importance of taking measures to address global energy supplies,” but did not elaborate on the nature of the discussions. A Chinese Ministry of Foreign Affairs summary of the meeting said President Xi had noted to Biden “the need for China and the US to call on the international community to jointly protect global energy security, strengthen cooperation on natural gas and new energy, and work with other countries to keep global industrial and supply chains safe and stable.” The release similarly failed mention any discussion of a possible joint release of crude reserves.
SCMP’s source said the US is hoping that China could join it in releasing reserves, with the issue said to have been discussed by Biden and Xi, and in a telephone conversation Saturday between Chinese Foreign Minister Wang Yi and US Secretary of State Anthony Blinken. According to the newspaper’s information, the issue is now being deliberated at the level of energy officials.
Wang Yongzhong, a senior research specialising in energy security with the Beijing-based Chinese Academy of Social Sciences, told SCMP that oil prices of $80 a barrel do not warrant the release of its energy reserves. “From a technical perspective, it’s not the time for China to do so. But the US indeed has the motivation because of its high inflation,” he said.
China reportedly already began releasing domestic refined gasoline and diesel reserves in some regions late last month in response to the domestic supply situation, but is thought to have held on to its strategic crude reserves.
As a major energy importer, a release of the PRC’s crude reserves could be risky for the Asian nation, since unlike the US, which is a major oil producer in its own right, Beijing does not have potential domestic production to fall back on. The size of the People’s Republic’s oil reserves – 220-384 million barrels, gives the country enough oil to last a maximum of about a month of consumption without imports. The US’s Strategic Petroleum Reserve, equivalent to 613 million barrels of crude, meanwhile, is enough to last about 90 days.
The Biden administration has been facing growing pressure at home to do something about galloping inflation –which hit a 30-year high in October, and has been driven largely by the seven-year high in gas prices. In addition to their direct impact on US drivers, the surge in the cost of fuel also means higher prices for virtually every product – from groceries to goods off Amazon, which need to be delivered by gas-burning vehicles. Last month, the Bank of America predicted that crude prices could soar another 50 percent in the coming months.
The White House’s inability to get inflation out of control has put a dent in his approval rating, with a Washington Post-ABC News poll released over the weekend finding that his overall job approval is now sitting at 41 percent, with just 39 percent of those polled approving his handling of the economy.
Washington has been negotiating with the Organization of the Petroleum Exporting Countries (OPEC) and its partners, including Russia, to increase oil output, so far without success, amid fears by the oil producing nations that an excess in supplies could lead to another catastrophic glut in the market like the one witnessed last year, which temporarily saw oil futures drop to historically unprecedented negative territory. Earlier this month, Biden energy secretary Jennifer Granholm blamed OPEC+ for its failure to heed US requests to ramp up supplies, suggesting that every US president can be “frustrated” by the energy markets “because they can’t control the price of gasoline, because it’s a global market.”