China Weighs Easing Crude Stockholding Rules Amid Rising Oil Prices

China may relax its crude oil stockholding rules in response to the recent surge in oil prices due to concerns over shrinking supplies linked to the Middle East conflict. According to three sources briefed on the matter, Beijing is considering easing curbs on tapping crude held in social responsibility stocks.

The move comes as Iranian crude has all but vanished from the market, pushing Chinese refiners toward more non-sanctioned barrels and lifting prices. An official at a state-run refiner noted that state-run plants require additional feedstock to keep the nation's crude runs going and to compensate for a decline in the independent sector.

Beijing had tightened curbs on state-run refineries withdrawing crude from social responsibility stocks in March, aiming to promote operational optimization and lock in maximum feedstock amid uncertainty stemming from the Middle East war. However, with international oil prices climbing above $130 per barrel, the stockholding requirement could drop to a minimum of 10 days of designed daily processing capacity.

China's crude inventories dropped to 1.295 billion barrels in the week of September 10, down from a record high of about 1.382 billion barrels at the end of May, according to Ursa Space. The decline was attributed mainly to commercial crude stocks, particularly those at privately owned ports in Shandong province.