The Biden administration is planning to release approximately 180 million barrels of oil over several months from the Strategic Oil Reserve (SPR), as the White House tries to reduce energy costs.
The United States, on average, uses approximately 21 million barrels of oil per day.
The Washington Free Beacon reports:
The latest amount of U.S. oil release being considered, which is equivalent to about two days of global demand, would mark the third time the United States has tapped its strategic reserves in the past six months, and would be the largest release in the near 50-year history of the SPR.
The International Energy Agency (IEA) member countries are also set to meet on Friday at 1200 GMT to decide on a collective oil release, a spokesperson for New Zealand energy minister said in an email, aimed at calming global crude prices that scaled 14-year highs this month amid the Russia-Ukraine conflict.
“The amount of the potential collective release has not been decided,” the spokesperson for minister Megan Woods said.
“That meeting will set a total volume, and per country allocations will follow,” she added.
While it was unclear if the U.S. Strategic Petroleum Reserve release would be part of a wider global coordinated release, the news slammed oil markets, pushing prices on both sides of the Atlantic down more than $6 a barrel.
Oil prices have been rising since Joe Biden took office, and have surged since Russia invaded Ukraine in late February and the United States and allies responded with hefty sanctions on Russia – the No.2 exporter of crude.
According to the Washington Free Beacon:
Russia is among the top three oil producers and accounts for about 14% of the world’s total supply.
Sanctions and reluctance to purchase Russian oil could remove about 3 million barrels per day (bpd) of Russianoil from the market starting in April, the IEA has said.
Russia exports 4 to 5 million bpd.
Supply concerns drove up benchmark Brent crude futures to about $139 a barrel this month, highest since 2008.
News of the potential oil release comes ahead of a meeting between the Organization of the Petroleum Exporting Countries and its allies including Russia, an oil producer group known as OPEC+. The United States, Britain and others have previously urged OPEC+ to quickly boost output.
However, OPEC+ is not expected to veer from its plan to keep boosting output gradually when it meets Thursday.
The U.S. SPR currently holds 568.3 million barrels, its lowest since May 2002, according to the U.S. Energy Department.
It was not immediately clear if a release of 180 million barrels would consist of exchanges from the reserve that would have to be replaced by oil companies later, outright sales, or a combination of the two.
The oil release would increase supplies in the market by 1 million barrels per day for six months and help the market rebalance this year, but it does not resolve the structural supply deficit, according to Goldman Sachs analysts.
