In an unprecedented move by the Chinese authorities that show the chinks in their armour, Beijing has released crude from its strategic reserve for the first time with the aim of lowering prices.
"Approved by the State Council, the State Bureau of Grain and Material Reserves, for the first time, organized the release of national reserve crude oil in phases and batches in a rotating manner," said State Bureau of Grain and Material Reserves in the statement on Thursday.
According to the statement, this is mainly aimed to ease the pressure of rising raw material prices for production enterprises.
"Implementing the normalized rotation of national oil reserves is an important way to give play to the regulatory role of the reserve market. Putting national reserve crude oil on the market through open auction sales will better stabilize the domestic market supply and demand and effectively guarantee national energy security," the statement further said.
Although the Chinese government didn't say how much oil it would eventually sell. However, hoarding barrels is critical for China, CNN reported. After China's announcement on Thursday, Oil prices fell to their lowest levels in two weeks. Experts say that China is heavily reliant on foreign oil to power its economy and has been working for years to boost its emergency stockpile of oil reserves.
Earlier, China had said that it wanted to have 85 million tons of oil in its emergency stockpile by the end of 2020, which is almost as much as the US's Strategic Petroleum Reserve.
The release of strategic reserve comes at a time when Beijing is facing inflation trouble, and the country's producer price index hit a 13-year high last month. Moreover, energy costs are also spiking, and demand is so high that some provinces have even experienced power shortages.
( With inputs from ANI )
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