US Senate votes to block SPR sales to China

The US Senate has approved an amendment to an annual defense bill that would block oil sales from the US Strategic Petroleum Reserve (SPR) to China, Russia, Iran and North Korea.

The amendment, which passed today in an 85-14 vote, would ban futures sales of crude from the SPR to the four countries, or any entities under their ownership or control. The purpose of the amendment is to prohibit the sale of crude reserves to countries that are "unequivocally US adversaries," US senator Ted Cruz (R-Texas) said.

The amendment, which is part of debate over the National Defense Authorization Act (NDAA), is similar to a bill the Republican-led US House of Representatives approved in January. The broad support in the Democratic-led Senate means the language has a higher chance of becoming law.

The idea of the policy gained traction after President Joe Biden's emergency sale of 180mn bl from the SPR last year, of which less than 2mn bl was purchased by a Chinese company. Republicans argue the drawdown reduced domestic energy security by draining SPR inventories to its lowest level in 40 years while allowing China to build its own strategic reserves.

But Democrats who oppose the policy say it will have no substantive effect on the ability of other countries to build their own reserves with crude from the US. They note that US companies sold 83mn bl of crude to China last year, which would be unaffected by the bill.

"This amendment creates the illusion of solving a problem while having very little political impact," US senator Chris Murphy (D-Connecticut) said.

The US is not required to sell any crude from the SPR until fiscal year 2027 and is instead working to partly refill the emergency reserve through purchases that could hit 13mn bl this year. Biden still has the authority to order emergency sales from the SPR.

The Senate earlier this week separately voted 65-28 to back another amendment that would bar the US president from leaving the NATO defense alliance without congressional approval. Former president Donald Trump, the leading Republican presidential candidate, weighed leaving NATO, his advisers have said.

The Senate is preparing to vote on the full NDAA as soon as next week. The bill typically passes with broad bipartisan support.

By Chris Knight