Chinese Oil Firms Sell Crude From Strategic Reserves

Chinese oil companies have aggressively sold crude oil through international tenders over a three-week period to capitalize on global shortages and high prices. This surge in supply comes as conflict between the United States, Israel, and Iran causes volatility in the Strait of Hormuz and pushes Brent crude futures to a session high of $101.15.

Marco Dunand, CEO of Mercuria, stated that China is utilizing its strategic petroleum reserve, which contains approximately 1.5 billion barrels, to meet international demand. Dunand identified that these state-linked firms have taken out significant demand from various countries by offering oil aggressively in tenders. He attributes the increased supply to the release of these domestic inventories, the ongoing sale of Iranian oil, and a decrease in Chinese domestic gasoline demand resulting from the widespread adoption of electric vehicles.

According to Dunand, China can likely sustain this selling position for roughly three more weeks. This strategic move provides a temporary buffer to the global market amid geopolitical tensions, including the reported cancellation of U.S. peace talks with Iran in Islamabad, which further contributed to the instability of oil prices. The activity was disclosed during the FT Commodities Global Summit, highlighting a shift in how China manages its energy security and leverages its reserves during periods of extreme market volatility.