In an effort to help cool oil prices, the White House announced on Tuesday that the US will release 50 million barrels of crude from the US Strategic Petroleum Reserve, senior Biden administration officials said, noting that the quantity that will start hitting the market in mid-to late-December, will take the form of a loan and a sale.
The effort is part of the coordinated efforts – and first for the United States – with some of the world’s largest oil consumers, such as China, India, South Korea, Japan, and Britain, that also agreed to release oil from strategic reserves
OPEC+, at the same time, announced it may reconsider plans next week to up oil production in the wake of the release of strategic petroleum reserves since some of its members argue that the announced release of millions of barrels is unjustified due to current market conditions.
The moves follow President Biden’s repeated calls for OPEC+ to increase oil production beyond a planned rise of 400,000 bpd each month until the end of 2022 and Rep. Ro Khanna’s initiative for the White House to reduce oil prices by banning US crude exports.
While Biden administration considers Khanna’s proposal, energy expert Daniel Yergin claims that the potential US ban on oil exports in an attempt to cool surging fuel prices which have soared since the end of 2020, will have the opposite effect
He argues that an export ban would actually raise prices overall and that the US doesn’t have significant leverage in this regard. Since the US gasoline prices are set by what happens in the global market which will be shocked if you suddenly take 3 million bpd out of it.
Yergin also believes that White House’s move to release oil reserves from its SPR to counter rising prices will have more of a psychological effect on other oil producers, rather than a material effect on the market.
Be the first to comment