The sources, who are acquainted with talks between the world’s two largest consumers of crude oil, said China agreed to release an unspecified amount of oil in late 2021, depending on the price level.
“China agreed to release a relatively larger amount if the oil is above $85 a barrel, and a smaller volume if the oil remains near $75,” a source said, without elaborating.
The release of crude oil stocks by China will take place around the Lunar New Year, which falls on Feb. 1, the sources said. China is closed for the biggest annual holiday from January 31 to February 6.
China’s National Food and Strategic Reserves Administration did not immediately respond to a request for comment.
China’s agreed reserve release is the culmination of a series of discussions, reported by Reuters in November that the Biden government held with other major oil consumers after tight supplies pushed global oil prices to multi-year highs. .
Biden and top officials discussed the possibility of a coordinated release of crude oil supplies with close allies, including Japan, South Korea and India, as well as China.
The United States has been conducting crude oil swaps and sales from its reserves in recent weeks, while Japan and South Korea have also announced plans for crude oil sales.
Oil prices rebounded to above $80 a barrel this week, supported by supply disruptions in Libya and Kazakhstan, a drop in U.S. crude oil inventories to their lowest since 2018, and an improving outlook for fuel demand in Japan. Europe, as governments there ease COVID-19 restrictions.
Benchmark Brent crude stood at $84.79 a barrel and US West Texas Intermediate crude stood at $82.23 a barrel at 0730 GMT.