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Senators aim to ban oil sales from US Strategic Reserve to China and Russia

Senators aim to ban oil sales from US Strategic Reserve to China and Russia File photo: Senators want to ban oil sales to China and Russia (Getty Images)

Senators introduced a bill on Thursday that strengthens the ban on selling crude oil from the US Strategic Petroleum Reserve to China and Russia, informs Reuters.

The bill, introduced by Republican Joni Ernst and Democrat John Fetterman, ensures that companies owned or controlled by the Chinese government will not be able to purchase oil from the Strategic Petroleum Reserve.

The funding bill signed by President Joe Biden earlier this month banned Chinese companies from buying oil but contained an exception if the oil was not exported to China.

Which countries the bill will affect

"This bipartisan bill will ensure America's Strategic Petroleum Reserve does not fall into the hands of those trying to harm us," said Ernst.

According to him, companies controlled by the Communist Party of China should not profit from accumulating oil subsidized by US taxpayers.

The bill will also block the export or sale of oil from the Strategic Petroleum Reserve to countries such as Russia, Venezuela, and Syria.

Reason for introducing the bill

"Our adversaries should not be able to purchase oil from our SPR — that's just commonsense," said Fetterman.

The push for a tough line on China is one of the few bipartisan sentiments in the deeply divided US Congress.

The issue of selling oil from the Strategic Petroleum Reserve to China intensified after Biden announced in 2022 the sale of 180 million barrels of oil from the reserve to curb gasoline prices.

It was the largest sale in history, and it was done due to a sharp increase in prices following Russia's invasion of Ukraine.

US Strategic Petroleum Reserve

The reserve consists of oil stored in four natural underground caverns along the Gulf of Mexico coastline in Texas and Louisiana. The US oil reserves are the largest in the world.

Established in 1975 by the US Congress following the 1973 oil crisis, the Strategic Petroleum Reserve was first utilized in 1991 during the Persian Gulf War.

Sanctions against the Russian oil sector

It's worth noting that the price cap on Russian oil at $60 per barrel, introduced in December 2022, reduced Kremlin revenues by 14%. Analysis from the Center for Research in Energy and Clean Air (CREA) indicates that over the past year, the price cap has cost the Kremlin €34 billion in export revenue, roughly equivalent to about two months' worth of income.

Recently, Reuters reported that Russian dictator Vladimir Putin might reconsider his decision if the West could reduce Russia's oil revenues.