Biden orders release of 50 million oil barrels from emergency reserves to reduce prices, challenging Opec+

Name: Coronavirus: How badly is Covid-19 disrupting the oil industry in the US and beyond?
Uploaded: 2021-11-23T15:00:50.000Z
Duration: 5 min 59 s
Description: Coronavirus: How badly is Covid-19 disrupting the oil industry in the US and beyond?

Unprecedented move to discharge stockpiled crude is in coordination with other nations – China, Japan, India, South Korea and UK

Decision comes after Opec+ countries rebuffed calls to significantly boost production, challenges grip Saudi Arabia, Russia and other Opec+ producers have on market

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A trucker puts fuel into his truck in Salt Lake City, Utah. US President Joe Biden has ordered the release of 50 million barrels of oil from US strategic reserves in a coordinated attempt with other countries to tamp down soaring fuel prices. Photo: AFP

Agencies

Published: 11:00pm, 23 Nov 2021

The US will release 50 million barrels of crude from its strategic reserves in coordination with China, Japan, India, South Korea and the UK in an unprecedented, coordinated attempt by the world’s largest oil consumers to tame prices that could prompt a backlash by Opec+.

Of that amount, 32 million will be released from the US Strategic Petroleum Reserve as an exchange over several months, while 18 million will be as an accelerated release from previously authorised sales, the White House said on Tuesday.

Storage tanks at a refinery in Detroit, US, in 2020. The White House said on Tuesday it had ordered 50 million barrels of oil to be released from strategic reserves to bring down energy costs. Photo: AP

The move is aimed at global energy markets, but also at voters who are coping with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel. Gas prices are at about US$3.40 a gallon, more than double their price a year ago, according to the American Automobile Association.

A Biden administration official said barrels would begin moving as early as mid- to late December. The administration is prepared to take further, unspecified steps, if needed, the White House said.

West Texas Intermediate crude for January delivery dropped 1.5 per cent to US$75.61 a barrel as of 7:19am in New York.

The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events. Maintained by the Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts. There are roughly 605 million barrels of sweet and sour petroleum in the reserve.

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Coronavirus: How badly is Covid-19 disrupting the oil industry in the US and beyond?

The decision to collectively discharge stockpiled crude after Opec+ countries rebuffed calls to significantly boost production marks a diplomatic win for the US and a challenge to the grip that Saudi Arabia, Russia and other Opec+ producers have on the market.