In a significant move encapsulated within the newly revealed U.S. funding legislation, congressional leaders have introduced a provision aimed at preventing China from purchasing oil from the Strategic Petroleum Reserve (SPR).
This step underscores the strong bipartisan consensus in the U.S. Congress towards adopting a stringent stance against China amidst ongoing tensions.
The bipartisan effort is evident through numerous legislative proposals targeting the competitive dynamics with China.
The issue gained momentum following President Joe Biden’s announcement in 2022 to sell 180 million barrels from the SPR to mitigate the surge in gasoline prices triggered by Russia’s invasion of Ukraine.
This decision led to sales of SPR oil to Chinese entities, including a transaction of 1 million barrels to UNIPEC America, a subsidiary of China’s Sinopec, and a previous sale under the Trump administration to PetroChina International.
These sales have contributed to the SPR’s decline to near 40-year lows, with current reserves standing at over 360 million barrels.
In response to these developments, the Senate, with a Democratic majority, voted decisively (85 to 14) in July to prohibit SPR oil exports to China.
Senator Chris Murphy commented on the measure, highlighting its minimal political effect and potential for unintended consequences.
Despite these legislative actions, U.S. oil companies exported a substantial 83 million barrels of oil to China in 2022.
The unveiling of the comprehensive 1,050-page funding bill, which addresses six of the twelve government segments requiring budget allocations, marks a critical step in this legislative process.
With the U.S. House of Representatives set to deliberate on the bill before it advances to the Senate, the legislative timeline is tight, aiming for completion by the end of the week, as indicated by Senate Majority Leader Chuck Schumer.
This legislative effort reflects a concerted attempt to recalibrate the U.S.-China economic and strategic relationship, especially in the energy sector, amidst broader geopolitical challenges.