The U.S. will release 50 million barrels of oil from its reserves

President Joe Biden announced the release of oil from the United States’ strategic reserves in an attempt to depress gasoline prices and stifle the rebound in the crude oil market that the White House described as a threat to global economic recovery.

The White House said on Tuesday that the president will authorize the release of 50 million barrels of oil “in the next few months” – equivalent to 2.5 days of US oil consumption – as a coordinated initiative with China, India, Japan, South Korea, and the United Kingdom.

But efforts to suppress oil prices, which have doubled in the past year, seem to be counterproductive, as the international crude oil benchmark Brent crude oil rose by more than 2% and traded at approximately US$81.40 per barrel in London on Tuesday morning.

Biden associates release with efforts to fight back Rising inflation, Said that Americans “felt the impact of rising gas stations and household heating bills, and American companies have also felt it, because as the global economy recovers from the pandemic, oil supply cannot keep up with demand.”

The decision was made weeks after a U.S. government official told the Financial Times that the oil was released In consideration. Saudi Arabia, Russia and other members of OPEC + Petroleum Exporting Countries have Rejected repeated requests from the U.S. To increase supply.

After the news came out, oil prices rose because traders calculated that the total amount to be released would be lower than expected, and OPEC+ may retaliate by suppressing more oil than planned. OPEC did not respond to a request for comment.

This is the largest release of crude oil from the U.S. Strategic Petroleum Reserve (the emergency reserve established after the oil crisis in the 1970s) since the Libyan Civil War in 2011 led to the rise in crude oil prices.

Analysts said that this is unlikely to have an impact on the price Biden hopes, and that this is an abuse of emergency reserves.

Bob McNally, head of the Rapidan Energy Group and former consultant, said: “Without geopolitical interference, coordinated raids on emergency stocks-designed to affect global oil prices-are a decisive energy policy precedent. , It may be counterproductive.” George W. Bush White House.

Britain will release 1.5 million barrels of oil and India will release 5 million barrels of oil. The numbers in other countries have not been confirmed.

As part of the exchange, the United States will release 32 million barrels of oil “in the next few months” to replenish stocks later. The other 18 million barrels will be released, involving the accelerated sale of oil that has been authorized by Congress and is expected by the market.

Biden is facing increasing political pressure to control gasoline prices — a 60% increase in the past 12 months — and other sources of high inflation, which have already hit the president and other Democrats in Congress in the midterm elections next year. The former approval rate.

Senior government officials said that they have been in contact with oil-producing countries in recent weeks, making it clear that their “preference” is for them to take action, but also that they will “use the tools at the hands of the president” to “respond” to current prices and The supply environment” does not have them.

The International Energy Agency was the regulatory agency for oil-consuming countries to coordinate oil releases in the past, but it did not participate in the White House’s statement. According to people familiar with the matter, some member states, including Germany, oppose the release within the scope of the IEA.

The agency said it recognizes that rising oil prices have placed a burden on consumers and increased inflationary pressures. “Under such circumstances, we respect the assessments and decisions made by individual IEA member states and partner countries on how to best respond to the specific challenges and situations they face,” it said.

A senior Biden official said: “OPEC+ stated that they plan to release an additional 400,000 barrels of oil a day starting in December. Our hopes and expectations [is that] They will continue to follow this path. “

The Washington Petroleum lobby group, the American Petroleum Institute, stated that any impact issued by the SPR “may be short-lived unless it is combined with policy measures to encourage energy production in the United States.”

Compared with the historical highs set before the pandemic, U.S. oil production has fallen by about 12%, and recovery has been slow, even though crude oil prices have doubled in the past year.

Senior officials in the Biden administration also emphasized that they not only hope that the price of oil will fall, but that this will be reflected in the price of gasoline.Biden last week called on the U.S. competition regulator, the Federal Trade Commission Combat price hikes In the department.

“Of course, we believe that not only the decline in oil prices is important, but also the decline in oil prices is important, which is why we are also so focused on ensuring that prices are quickly passed to consumers in the way they should be,” said a senior administrative official.

Additional reporting by Jim Pickard in London, Myles McCormick in New York and Amy Kazmin in New Delhi

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