The United States will release 50 million barrels of oil from reserves

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President Joe Biden announced the release of oil from the United States’ strategic stockpile in an effort to lower gasoline prices and stem a rally in the crude oil market that the White House said posed a threat to the global economic recovery.

The White House said Tuesday that the president was authorizing the release of 50 million barrels of oil in the coming months, in a move that will be coordinated with releases from China, India, Japan, South Korea and the United Kingdom.

Biden linked the release to efforts to beat sharply rising inflation, saying Americans were “feeling the impact of higher gas prices at the pump and in their home heating bills, and so are American companies, because oil supplies haven’t kept pace with demand as the global economy is emerging from the pandemic.”

The decision came, weeks after the US government told the Financial Times that a release of oil was being considered, after Saudi Arabia, Russia and other members of the OPEC+ oil-exporting group rejected repeated US pleas to increase supplies.

Oil prices rose after the news, with the international benchmark Brent rising 0.15 percent to $79.82 a barrel, as traders estimated that the total volume to be released would be less than expected, and that OPEC+ could retaliate by curbing more oil than planned. . OPEC has not commented.

This release is the first major unplanned release of crude oil from the US Strategic Petroleum Reserve – an emergency stockpile created in the wake of the oil crises of the 1970s – since the civil war in Libya sent crude prices soaring in 2011.

Analysts said it was unlikely to have an effect on prices Biden had hoped and that was an abuse of the emergency reserve.

Bob McNally, president of Rapidan Energy Group and a former adviser to the George W. Bush White House, said.

She told the Financial Times that the UK would release 1.5 million barrels. India will release five million barrels. Sizes from other countries not yet confirmed.

The US will release 32 million barrels “over the next several months” as part of an exchange that allows it to replenish stocks later. Another 18 million barrels to be released includes a rapid oil sale already authorized by Congress and expected by the market.

Biden faces mounting political pressure to tame gasoline prices and other sources of high inflation, which has weighed on approval ratings for both the president and other Democrats in Congress ahead of next year’s midterm elections.

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Senior administration officials said they have been in contact with oil-producing nations in recent weeks, explaining that their “preference” is for them to take action, but they will also “use the tools at the president’s disposal” to “respond to the current price and supply environment” without them.

The International Energy Agency, the watchdog for oil consuming nations that has coordinated oil releases in the past, was not part of the White House announcement. The agency did not respond to requests for comment.

A senior Biden official said: “OPEC+ said they plan to release an additional 400,000 barrels per day starting in December, our hope and our expectations.” [is that] They will continue on this path.”

Senior officials in the Biden administration also stressed that they are not only looking for lower oil prices, but that it is reflected in gasoline prices. Biden last week called on the Federal Trade Commission, the US competition watchdog, to crack down on price gouging in the sector.

“We, of course, believe that it’s not just important for oil prices to go down, but for prices to go down at the pump, which is also why we’re focused on making sure that prices pass quickly to consumers as they should,” a senior administration official said.

Additional reporting by Jim Pickard in London and Miles McCormick in New York

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