Thu. Jul 7th, 2022


President Joe Biden is close to announcing another big release of oil from emergency stocks in the US as he steps up efforts to cool crude prices that are feeding in to high inflation across the economy, three people familiar with the plan said.

The move by the White House is expected on Thursday and would mark the third and potentially biggest oil release it has announced since November.

Oil prices fell on reports of Biden’s impending announcement, with West Texas Intermediate, the US oil marker, down 4.7 per cent to $ 102.75 and international benchmark Brent crude down 3.7 per cent to $ 109.30.

One person familiar with the plan said the final details were still being ironed out but the release from the US strategic petroleum reserve was expected to last several months and amount to as much as 1mn barrels of oil per day.

The US consumes about 20mn barrels a day, representing about a fifth of global demand.

At 1.30pm on Thursday, Biden is due to speak on “his administration’s actions to reduce the impact of [Vladimir] Putin’s price hike on energy prices and lower gas prices at the pump for American families ”, according to the White House schedule.

Since Moscow’s invasion of Ukraine, Biden has increasingly blamed Russia’s president for high inflation, which is hurting his approval ratings and damaging the Democratic party’s chances of retaining control of Congress in the midterm elections in November.

The White House move also comes as western countries have stepped up sanctions against Russia, the world’s largest petroleum exporter, including a ban by the US on oil imports from the country in the wake of Moscow’s invasion of Ukraine.

The International Energy Agency, a watchdog for western consumer countries, said this month that sanctions on Russia and shippers’ reluctance to load Russian crude could cut the country’s output by up to 3mn barrels a day, or about 3 per cent of the world’s total, by April.

“It would not be surprising for the administration to extend the [earlier stock releases] given the large Russian oil supply disruption risk is not going away, ”said Bob McNally, an adviser to former US President George W Bush who now heads consultancy Rapidan Energy Group.

Oil prices have surged since the invasion, with international benchmark Brent hitting 14-year highs this month. Prices have almost doubled in the past year, while average petrol prices are up almost 50 per cent and hit records in recent weeks.

The US has also urged Saudi Arabia and other big Opec oil producers to increase the pace of supply increases, but the cartel has resisted pressure to do so. The producer group will meet on Thursday to decide its output policy.

The SPR is a government-maintained emergency storage complex consisting of four underground sites in salt domes close along the US Gulf Coast. It holds 568mn barrels of crude oil, according to the federal Energy Information Administration.

Biden announced a release from the SPR in November, and last month the US joined other members of the IEA in a co-ordinated global release.

Previous large stock releases have occurred after supply disruptions such as Hurricane Katrina in 2005 and the Libyan civil war in 2011.

The Department of Energy declined to comment.

Additional reporting by Myles McCormick in New York

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