The latest U.S. funding bill has included a provision to block China from purchasing oil from the Strategic Petroleum Reserve (SPR).
In a move reflecting bipartisan concern over China’s economic influence, the latest U.S. funding bill has included a provision to block China from purchasing oil from the Strategic Petroleum Reserve (SPR). This measure, announced by congressional leaders on Sunday, underscores the growing tensions between the United States and China on economic and geopolitical fronts.
The desire for a tough stance on China is one of the rare areas of agreement in the deeply polarized U.S. Congress. Lawmakers from both sides of the aisle have introduced numerous bills aimed at addressing the competitive challenges posed by China’s government.
The issue of sales from the SPR to China gained prominence following President Joe Biden’s decision in 2022 to sell 180 million barrels of SPR oil to stabilize gasoline prices following Russia’s invasion of Ukraine. This move sparked concerns about the potential strategic implications of supplying oil to China, given its status as a major global economic player.
In 2022, the SPR sold 1 million barrels to UNIPEC America, a Houston-based subsidiary of China’s Sinopec. This transaction followed a similar sale under the administration of former President Donald Trump in 2017 when SPR oil was sold to PetroChina International, a subsidiary of the Chinese state-owned oil company PetroChina Co Ltd.
The current inventory of the SPR stands at over 360 million barrels of oil but is nearing 40-year lows due to the sales made in 2022. This has raised concerns about the strategic adequacy of the reserve in the face of potential future supply disruptions.
Efforts to restrict oil exports to China gained momentum last July when the Democratic-controlled Senate passed a bill by a significant margin, with an 85 to 14 vote, to ban exports of SPR oil to China. Senator Chris Murphy, a Democrat, expressed skepticism about the effectiveness of such measures, suggesting that they might create the illusion of solving a problem while having minimal political impact and potentially causing more harm than good.
In 2022 alone, U.S. oil companies sold 83 million barrels of oil to China, highlighting the significant economic stakes involved in the relationship between the two countries.
The 1,050-page US funding bill unveiled by congressional negotiators on Sunday encompasses funding for six of the twelve segments of the government, with the remainder expected to be addressed later this month. The bill’s passage through the legislative process will involve a vote in the U.S. House of Representatives before it can proceed to the Senate for consideration.
Senate Majority Leader Chuck Schumer has indicated that the House is scheduled to convene on Tuesday to commence deliberations on the bill. The timing of the legislative process underscores the urgency with which lawmakers are addressing the issue of China’s access to the Strategic Petroleum Reserve and its broader implications for U.S. economic and national security interests.