Mon. Dec 6th, 2021

President Joe Biden has announced the release of oil from US strategic stocks in an effort to bring down petrol prices and eliminate a crude market march that, according to the White House, poses a threat to the global economic recovery.

The White House on Tuesday said the president would authorize the release of 50 million barrels of oil in the coming months, in a move that would be coordinated with releases from China, India, Japan, South Korea and the UK.

Biden linked the release to efforts to repel sharply rising inflation, saying Americans are feeling the impact of rising gas prices at the pump and in their home heating bills, and U.S. businesses are also because oil supplies have not kept pace with demand. as the world economy emerges from the pandemic ”.

The decision, after weeks of US government hints that an oil release was on the map, came after Saudi Arabia, Russia and other members of the Opec + group of oil exporters rejected repeated U.S. pleas to increase supply.

Oil prices rose on the news, with international benchmark Brent rising 0.15 percent to $ 79.82 a barrel as traders calculated that the total volume to be released would be less than expected, and that Opec + could reciprocate by more oil to hold back as planned. Opec did not comment.

The 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 1970s oil crises – since the civil war in Libya threatened to cause a rise in crude oil prices.

Analysts said it was unlikely to have the impact Biden had hoped for, and that it was an abuse of the emergency reserve.

“A coordinated raid of emergency supplies without a geopolitical disruption – and intended to affect global oil prices – is a fatal energy policy precedent that is likely to have a setback,” said Bob McNally, head of Rapidan Energy Group and a former adviser to the George W Bush White House.

Biden is facing increasing political pressure to tame gasoline prices and other sources of high inflation, which has hit the approval ratings of both the president and other Democrats in Congress heading into next year’s midterm elections.

Senior administration officials told reporters on Tuesday morning that the pandemic meant the market was “outside”, leading to “high oil prices at the moment, and an expectation of falling oil prices looking ahead”, which needed to be addressed.

Officials said they had kept in touch with oil-producing countries in recent weeks, making it clear that their “preference” was for them to act, but also that they would “use the tools at the president’s disposal” to “respond” at the current price and supply environment ”without them.

One senior Biden official said: “Opec + has said it plans to release an additional 4,000 barrels a day from December and we hope and expect [is that] they will continue at that rate. ”

Senior officials from the Biden administration also stressed that they are not only looking for oil prices to fall, but that this is reflected in petrol prices. Biden last week called on the Federal Trade Commission, the U.S. competition watchdog, to discount price reduction in the sector.

“Of course we think it is not only important that oil prices fall, but prices that fall at the pump, and that is why we are so focused on making sure that prices pass quickly to consumers as they should,” said one senior administration official. .

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