Biden to release U.S. oil reserves in challenge to OPEC+
BNN Bloomberg
The U.S. will release 50 million barrels of crude from its strategic reserves in concert with China, Japan, India, South Korea and the U.K. -- an unprecedented, coordinated attempt by the world’s largest oil consumers to tame prices that risks a backlash by OPEC+.
The U.S. will release 50 million barrels of crude from its strategic reserves in concert with China, Japan, India, South Korea and the U.K. -- an unprecedented, coordinated attempt by the world’s largest oil consumers to tame prices that risks a backlash by OPEC+.
But the oil market was initially underwhelmed by the details of the package -- much of the oil will need to be returned to the stockpile by the refiners who buy it, and international contributions were smaller than many expected. After an initial dip in prices, oil gained more than a US$1 a barrel.
The response of OPEC+ will be key to the eventual success or failure of the plan. Officials from the Saudi-led group, which meets to set policy next week, have warned they’re likely to respond by canceling plans to boost their own production, negating the addition of stockpiled oil onto the market.
At stake is the price of the world’s most important commodity as President Joe Biden contends with the strongest inflation in more than a decade, a surge that’s hitting his approval ratings and risks undermining the post-COVID economic recovery. The administration said on Tuesday it had other tools at it’s disposal to bring down energy prices if need be.
Of the 50 million barrels , 32 million will be issued from the U.S. Strategic Petroleum Reserve as an exchange over the next several months, while 18 million will come from an accelerated release from previously authorized sales, the White House said in a statement Tuesday. It represents one of the biggest drawdowns ever from the reserve, surpassing U.S. interventions amid Libyan unrest in 2011 and Operation Desert Storm in 1991.
A senior administration official told reporters Tuesday that barrels would begin moving as soon as mid-to-late December.
