This is news to me.

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We knew there was a reason why China had accumulated a cool 1.5 billion barrels in its strategic petroleum reserve: the reason, to become the world's strategist petroleum reserve when the time arises... for a price of course.

According to the chief executive officer of commodity trader Mercuria, Chinese oil companies have been aggressive sellers in recent weeks, selling barrels to several nations in tenders.

"What has been happening in the last two or three weeks is actually they have been aggressively selling crude oil," Mercuria CEO Marco Dunand said at the FT Commodities Global Summit in Lausanne on Tuesday. "They've taken out a lot of demand from various countries and offered aggressively in tenders."

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• Possible drivers include releases from Chinese oil inventories, continued sales of Iranian barrels, and bets the Strait of Hormuz reopens sooner than expected.
• Dunand gives the selling roughly three more weeks before China has to rethink its position, a window that tracks with the Iran war endgame.

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He also said that Mercuria sees Chinese gasoline demand falling by 1 million barrels a day this year as a result of electric-vehicle adoption, which also could have played a factor in the sales.

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Guess those dirty coal plants come in handy for that.

So you O&G folks. Is this a good reliable source?

https://oilprice.com/Energy/Crude-Oil/China-Aggressively-Dumps-Oil-In-Tenders-As-Iran-War-Reshapes-Flows.html

I've read China has oil and gas in the grind but they absolutely suck at recovering it...

They aren't stupid though. They're reliant on oil from turbulent places. When the West sanctions someone like Iran they're happy to buy it at a discount. Iran doesn't see them as a threat since they aren't Christian. Chinas oil reserves are purely strategic.

Wars are run on well feed troops and full fuel tanks. They know Japan bombed Pearl Harbor in the hopes of opening up their oil trade routes. We beat Germany when they couldn't fuel their tanks and trucks. Should the day ever arise... We'll lock them away from many of their conventional sea lanes.

aggiehawg said:

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This is news to me.

Quote:

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We knew there was a reason why China had accumulated a cool 1.5 billion barrels in its strategic petroleum reserve: the reason, to become the world's strategist petroleum reserve when the time arises... for a price of course.

According to the chief executive officer of commodity trader Mercuria, Chinese oil companies have been aggressive sellers in recent weeks, selling barrels to several nations in tenders.

"What has been happening in the last two or three weeks is actually they have been aggressively selling crude oil," Mercuria CEO Marco Dunand said at the FT Commodities Global Summit in Lausanne on Tuesday. "They've taken out a lot of demand from various countries and offered aggressively in tenders."

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Quote:

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• Possible drivers include releases from Chinese oil inventories, continued sales of Iranian barrels, and bets the Strait of Hormuz reopens sooner than expected.
• Dunand gives the selling roughly three more weeks before China has to rethink its position, a window that tracks with the Iran war endgame.

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Quote:

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He also said that Mercuria sees Chinese gasoline demand falling by 1 million barrels a day this year as a result of electric-vehicle adoption, which also could have played a factor in the sales.

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Guess those dirty coal plants come in handy for that.

So you O&G folks. Is this a good reliable source?

https://oilprice.com/Energy/Crude-Oil/China-Aggressively-Dumps-Oil-In-Tenders-As-Iran-War-Reshapes-Flows.html

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So, the coal plants are revolting?

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They aren't stupid though. They're reliant on oil from turbulent places. When the West sanctions someone like Iran they're happy to buy it at a discount. Iran doesn't see them as a threat since they aren't Christian. Chinas oil reserves are purely strategic.

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My assumption would be such a strategy would be because of plans to invade Taiwan and to support that effort. As you said, war needs fuel for both men and machines.

Assuming that was the original intent, this massive release is indication that Taiwan being invaded is off of the table for now?

I assume that a significant reason for dumping crude inventory is the current market price.

IIIHorn said:

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I assume that a significant reason for dumping crude inventory is the current market price.

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Which is short term thinking not common for the CCP, assuming my premise they were preparing for an invasion is correct. Making a lot of money short term in an unstable and unpredictable worldwide oil market from a supply side? Seems risky to me, unless China's economy is really hurting that badly.

They are insider trading. They know this conflict will end soon

aggiehawg said:

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IIIHorn said:

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I assume that a significant reason for dumping crude inventory is the current market price.

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Which is short term thinking not common for the CCP, assuming my premise they were preparing for an invasion is correct. Making a lot of money short term in an unstable and unpredictable worldwide oil market from a supply side? Seems risky to me, unless China's economy is really hurting that badly.

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I should have phrased it as 'another' significant reason.

Also,

You have my permission to refer to me as Captain Obvious.

Kenneth_2003 said:

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I've read China has oil and gas in the grind but they absolutely suck at recovering it...

They aren't stupid though. They're reliant on oil from turbulent places. When the West sanctions someone like Iran they're happy to buy it at a discount. Iran doesn't see them as a threat since they aren't Christian. Chinas oil reserves are purely strategic.

Wars are run on well feed troops and full fuel tanks. They know Japan bombed Pearl Harbor in the hopes of opening up their oil trade routes. We beat Germany when they couldn't fuel their tanks and trucks. Should the day ever arise... We'll lock them away from many of their conventional sea lanes.

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For whatever reason China appears to be really bad at allocating resources quickly enough to operate in the E&P world. They have tried many times to enter the US market and they just can't do it.

Rocky Rider said:

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Buy low and sell high just sounds like good business.

Unlike Joe Biden who bought low and sold lower.

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A good capitalist business. Funny that is not in Mao's little red book.

When I worked for US SHELL OIL, I was able to on a daily basis watch a drilling platform in China real time. The equipment we supplied was state of the art, what they had looked like it was out of the 40's. Even their restrooms were just holes in the ground…..until SHELL H&S threw a safety flag.

They are not good at E&P.

What's frustrating about the entire relationship with China is that they have been openly treating us as an enemy for years, while we have not done much in kind to them.

US companies shifting their models to utilize China over the previous decades are (metaphorically speaking) a stupid greedy fat kid, trying to jump into a tiger pen at the zoo because 'I do what I want, and I wanna pet the kitty!"

aggiehawg said:

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Quote:

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They aren't stupid though. They're reliant on oil from turbulent places. When the West sanctions someone like Iran they're happy to buy it at a discount. Iran doesn't see them as a threat since they aren't Christian. Chinas oil reserves are purely strategic.

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My assumption would be such a strategy would be because of plans to invade Taiwan and to support that effort. As you said, war needs fuel for both men and machines.

Assuming that was the original intent, this massive release is indication that Taiwan being invaded is off of the table for now?

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My opinion... and with this and your own $5 you can buy a coffee...
Taiwan was and will always be a thorn in China's side. Other than territorial pride it is of zero significant strategic use to them if not 100% intact. A ground invasion to seize it will be messy and result in significant destruction of the very long lead time infrastructure assets present.

As to your question... I think the US under Trump has shown China a tremendous strategic superiority at present. Militarily we have flown right past the very best they provided the Iranians and waved at it as we did so. Their best systems cannot stop us. Further we now have strategic control over the Straits of Malacca with an alliance in place with Indonesia. Additionally we've shut off their influence and potential to control the Panama canal by forcing them to spin off their interests/ownership of the container ports on both the Pacific and Atlantic entrances.

As long as President Trump's policies and alliances remain in place, we have China in a vice grip.

Are they profiting off their current stockpile? Or are they simply trying to help out their own allies? That I don't know.

FCBlitz said:

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When I worked for US SHELL OIL, I was able to on a daily basis watch a drilling platform in China real time. The equipment we supplied was state of the art, what they had looked like it was out of the 40's. Even their restrooms were just holes in the ground…..until SHELL H&S threw a safety flag.

They are not good at E&P.

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That tracks with my other research on China's military manufacturing prowess, or to be more precise, lack thereof. They can steal technology, reverse engineer it BUT then they tweak things for different specs but cannot follow through with other necessary changes throughout the design. Ultimately results in a high failure rate.

Quantity is stressed over quality.

TexasAggiesWin said:

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Rocky Rider said:

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Buy low and sell high just sounds like good business.

Unlike Joe Biden who bought low and sold lower.

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Yeah just bad luck or bad timing that Sleepy Joe was emptying our reserves.

aggiehawg said:

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FCBlitz said:

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When I worked for US SHELL OIL, I was able to on a daily basis watch a drilling platform in China real time. The equipment we supplied was state of the art, what they had looked like it was out of the 40's. Even their restrooms were just holes in the ground…..until SHELL H&S threw a safety flag.

They are not good at E&P.

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That tracks with my other research on China's military manufacturing prowess, or to be more precise, lack thereof. They can steal technology, reverse engineer it BUT then they tweak things for different specs but cannot follow through with other necessary changes throughout the design. Ultimately results in a high failure rate.

Quantity is stressed over quality.

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China CAN build top of the line high quality stuff. But they're just as likely to look for ways/places to cut corners if and when they can get away with it.

Quotas, numbers, production, etc are probably key metrics used to measure success. It's the centralized state control. Above all, be able to report to the state their started goals have been met.

I presume it's very similar to to the old Soviet aparachak. Anecdotally it tracks with the motivation to cover up an accidental release of Covid from their bipolar. Don't let information out outcomes that are bad for the State get out.

The EV adoption reducing gas consumption makes sense. China went all-in on this. A mind blowing fact I read in WSJ several months ago is that China has/had 400+ different car manufacturers all backed by the government and all going hard into EV. Thats the reason why they have been dumping EVs into every market that will let them because their domestic population can't absorb all of them..

YouBet said:

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The EV adoption reducing gas consumption makes sense. China went all-in on this. A mind blowing fact I read in WSJ several months ago is that China has/had 400+ different car manufacturers all backed by the government and all going hard into EV. Thats the reason why they have been dumping EVs into every market that will let them because their domestic population can't absorb all of them..

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Hmm. China's electric grid is say...EMPed?

aggiehawg said:

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YouBet said:

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The EV adoption reducing gas consumption makes sense. China went all-in on this. A mind blowing fact I read in WSJ several months ago is that China has/had 400+ different car manufacturers all backed by the government and all going hard into EV. Thats the reason why they have been dumping EVs into every market that will let them because their domestic population can't absorb all of them..

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Hmm. China's electric grid is say...EMPed?

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Yer good.

REAL good.

( ... laughing/crying emoticon ... )

Rocky Rider said:

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Buy low and sell high just sounds like good business.

Unlike Joe Biden who bought low and sold lower.

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Member when Trump wanted to fill the oil reserve at $20/bbl and democrats passed legislation to stop him?

It used to be Chinese consumers would buy European cars in tier 1 cities after 7 years or so they would sell the used car to a lower economic tiered city and purchase a new one for themselves. That has changed recently. There are several EV companies that are making cheap EVs for everyone and after 6 or 7 years the cars literally get thrown away and they buy a new one. This definitely gives them more flexibility on oil reserves. What they really need is a solution on what to do with all these old EVs.

Rocky Rider said:

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Buy low and sell high just sounds like good business.

Unlike Joe Biden who bought low and sold lower.

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China disoriented him.

Reselling is only good if you can get it at a massive discount. They are no longer getting that discount.

I use this source every day but they just report prices and news articles.

Another good source is the EIA. Here's the link

https://www.eia.gov/todayinenergy/detail.php?id=67504

Another source is J Kemp

https://jkempenergy.com/

Our strategic petroleum reserve (SPR) has about 414, million barrels in it at the present moment it will hold about 715 million barrels.



China only produces about 4.3 million barrels per day domestically.
They imported last year about 11.55 barrels per day. They are a heavy importer of oil.

That's interesting. I figured that running down China's SPR might've been an ulterior motive to the "Bull in a China Shop" show in the ME. Ryan McBeth has posted a couple of videos saying China's oil reserves will run out in early June.

But China selling it off implies they're not close to feeling any pressure.