US Oil Reserve Sales to China Could Be Blocked in Defense Bill

The Senate adopted an amendment Thursday that blocks China from purchasing oil from the US’s emergency stockpiles.

(Bloomberg) — The Senate adopted an amendment Thursday that blocks China from purchasing oil from the US’s emergency stockpiles. 

The measure added to the must-pass National Defense Authorization Act comes amid a renewed focus on the country’s Strategic Petroleum Reserve, which stands at a 40-year-low following the Biden administration’s 180 million barrel drawdown last year to help tame oil prices in the aftermath of Russia’s invasion of Ukraine. The measure, sponsored by West Virginia Democratic Senator Joe Manchin and Senator Ted Cruz, a Texas Republican, passed by a vote of 85-14. 

The legislation is similar to a bill that passed the House in January that would prohibit the sale of US oil from the reserve to any company under the control of the Chinese Communist Party and ban the export of any crude oil from the SPR to China. The Senate version also bars the sale of oil to Russia, North Korea and Iran, according to Manchin.

The Strategic Petroleum Reserve, created in the aftermath of the Arab oil embargo in the 1970s, currently stands at 346.8 million barrels. The Biden administration has vowed to refill the reserve, though so far the pace has been a trickle. 

Republicans, who have criticized the historic release as a ploy to lower gas prices before the midterm election’s last November, have also raised flags about the administration’s use of the emergency stockpiles, alleging the Energy Department transferred 900,000 barrels of oil to Unipec America Inc. The company is a subsidiary of Communist Party owned Sinopec Corp. and the recipient of billions of dollars of investment by BHR Partners, a private equity firm where Hunter Biden, the president’s son, was a founding board member.

Read More: Massive US Oil Caverns Sit Empty and Will Take Years to Refill

The White House has said the Energy Department is required by law to sell the SPR oil in a competitive auction to the highest bidder, regardless of whether the bidder is a foreign company. It has also said that the release of oil from the reserve last year was needed to address price spikes caused by the conflict in Ukraine and ensuing supply disruptions. 

The annual US defense policy bill is considered as must-pass because it authorizes pay increases as well as compensation for troops in harm’s way and is widely-supported by Republicans. The Senate is hoping to finish the bill before the August recess.

–With assistance from Roxana Tiron.

(Updates with vote results starting in first paragraph.)

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