Page 5 - AsianOil Week 46 2021

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warning that OPEC+ anticipated a “seasonal The government invited some domestic
drop in demand in the fourth and first quar- refiners to participate in a crude reserve auction
ters of the year. He added that European oil in September, selling around 7.38mn barrels of
product demand had also shown signs of a reserves.
contraction in October. “China has its own plan for the [SPR] releases.
The minister said this “basically underscores [We expect] the second release volume should
the fact that global oil demand is still under be similar to the first one,” Beijing-based SIA
pressure from the delta COVID variant, and due Energy analyst Sengyick Tee told Reuters. The
to the preservation of various limitations and analyst said the volume would be too small to
COVID measures in some countries.” have an impact on stockpiles or refinery costs.
The NFSRA announced on October 31 that it
Traction issues would release some oil product reserves in order
Although the US is now pushing for Asia’s to tackle supply shortages and stabilise prices.
biggest oil consumers to open their SPRs, the
amount of follow-through may be limited. What next
Both Japan and South Korea have indicated The fact that the US has been working behind
that they would be unable to release their crude the scenes to create a coalition of oil buyers able
reserves in order to influence international and willing to tackle OPEC+ should not be sur-
prices. prising. In the hours following OPEC+’s decision
An official with the Japanese Ministry of earlier this month, the Biden administration
Economy, Trade and Industry (METI) con- announced that it would consider using “the full
firmed to Reuters that the US had asked for range of tools” to protect the economy.
Tokyo’s help in dealing with higher oil prices, but “They have the capacity and the power now to
added that Japanese law prevented the country’s act and make sure this critical moment of global
reserves from being used in such a way. recovery is not impaired,” White House spokes-
A South Korean official similarly confirmed woman Karine Jean-Pierre said on November
Washington’s request, before adding: “We are 4. She added the US operates in “a competitive
thoroughly reviewing the US request; however, free market system” and stressed that OPEC+
we do not release oil reserves because of rising had affected global oil prices that, in turn, affect
oil prices. We could release oil reserves in case domestic gasoline prices.
of supply imbalance, but not to respond to rising What would be surprising is if Washington is
oil prices.” able to get much traction, given its strained rela-
While China’s National Food and Strategic tions with China and the apparent apathy shown
Reserves Administration (NFSRA) has con- by Japan and South Korea. India, which has long
firmed that the government is planning to tap its called for a coalition of consumer countries, does
SPR for the second time this year, one analyst has not have a large enough SPR to make a meaning-
warned that the volume will likely be too small to ful contribution to the debate.
have much of an impact. For its part, OPEC+ will be unwilling to pres-
“We are carrying out the work of releasing sure on this front given its warning that there is
crude oil reserves. And for any details related a real risk of a market oversupply in the coming
to the releasing, we will put out a statement on months. OPEC Secretary-General Mohammad
our website,” Reuters quoted an NFSRA spokes- Barkindo told reporters on November 16 that a
woman as saying on November 17. She declined surplus could emerge as soon as December. He
to comment on whether the release was in said: “These are signals that we have to be very,
response to Washington’s request. very careful.”™

Week 46 19•November•2021 www. NEWSBASE .com P5