Biden oil reserves bet melds China outreach with appeal to U.S.

By Timothy Gardner and Jarrett Renshaw

WASHINGTON (Reuters) – President Joe Biden’s historic move to release oil from strategic reserves in coordination with big nations including China represents a unique bet that finding common ground with the United States’ biggest economic rival can help dampen fuel prices for middle class Americans.

The move, announced by the U.S. on Tuesday, underscores the complicated relationship Biden is trying to craft with China as he seeks agreement on key issues like climate change and trade, while linked in an economic arms race. The rare moment of cooperation comes as inflation, and especially high gasoline prices, eat at Biden’s popularity at home.

“This is a new era of oil diplomacy for the U.S. to coordinate with India and China” said Daniel Yergin, an oil historian and the vice chairman of IHS Markit. Cooperation with China is likely to stick to energy and environment.

“Climate and energy are in a separate category from all the tough issues that need to be dealt with between the two countries,” Yergin said.

The Biden administration’s diplomatic inroads with China first surfaced in Glasgow, Scotland this month where the two countries hammered out a surprise deal on boosting action on climate change including reducing emissions of methane, a powerful greenhouse gas.

“Glasgow showed that there is some level of common interest and diplomacy that can be successful between the United States and China,” said Amy Myers Jaffee, a research professor at Tufts University and expert on global energy markets and climate.

Jaffee said both countries recognized the importance of a global climate agreement. “I would say ‘Ditto’ on the oil market,” Jaffee said.

Washington has stark differences with Beijing on trade issues and human rights concerns related to Xinjiang, Hong Kong, Tibet and Taiwan. But the world’s top two economies would benefit from energy cooperation given their adversarial relations with Saudi Arabia and Russia in terms of keeping oil prices low for consumers.

Combined, the United States and China consume nearly 35 million barrels of oil a day, more than a third of global demand. Even though the United States has become one of the world’s largest oil producers, it is still the second-largest importer of crude, trailing only China.

U.S. gas prices at seven-year high U.S. gas prices at seven-year high https://graphics.reuters.com/USA-GASOLINE/PRICES/znvnekmrbpl/chart.png

The world’s top oil-importing nations https://graphics.reuters.com/GLOBAL-OI/lbpgnbezdvq/chart.png

China now imports more than 10 million barrels of oil a day, The United States imports about 6 million barrels per day, though in recent years it has sharply reduced its dependency on OPEC producers, with most of its imports now from Canada.

While China did…