The Biden administration is weighing the largest source of emergency oil reserves ever drawn

Current gasoline prices are displayed in California
A U.S. Postal worker fastens his seat belt after dumping his vehicle at a gas station in Garden Grove, California, March 29, 2022. REUTERS/Mike Blake

March 31, 2022

By Jarrett Renshaw, Steve Holland and Timothy Gardner

WASHINGTON (Reuters) – The Biden administration is considering releasing up to 180 million barrels of oil from the Strategic Petroleum Reserve (SPR) over several months, four US sources said on Wednesday, while the White House seeks to cut fuel prices.

The move would mark the third time the United States has tapped into its strategic reserves in the past six months and would be the largest release in the SPR’s nearly 50-year history.

So far, the releases have failed to bring prices down as global demand has almost reached pre-pandemic levels while global supply has tightened.

Oil prices have risen since Russia invaded Ukraine in late February and the United States and its allies responded with heavy sanctions on Russia, the world’s second largest exporter of crude oil. Brent crude, the global benchmark, rose to about $139 earlier this month, its highest level since 2008, and was trading at nearly $110 a barrel in Asian trading on Thursday. [O/R]

President Joe Biden will deliver comments on his administration’s actions Thursday, the White House said.

Russia is one of the largest oil producers in the world, contributing about 10% of the world market. But sanctions and buyers’ reluctance to buy Russian oil could take about 3 million barrels per day (bpd) of Russian oil off the market starting in April, the International Energy Agency (IEA) said.

Russia exports 4 to 5 million bpd.

The news comes just before the Organization of the Petroleum Exporting Countries and its allies, an oil-producing group known as OPEC+ that includes Saudi Arabia and Russia, meet to discuss reducing supply restrictions. The United States, Britain and others have previously urged OPEC+ to ramp up production quickly.

However, OPEC+ is not expected to deviate from its plan to gradually increase production further on Thursday.

The US SPR currently holds 568.3 million barrels, the lowest since May 2002, according to the US Department of Energy.

The United States is considered a net oil exporter by the IEA. However, that status could change to net importer this year and then revert back to exporter as production recovers slowly from the COVID-19 pandemic.

It wasn’t immediately clear whether a withdrawal of 180 million barrels for exchanges from the reserve that would need to be replaced by oil companies at a later date would consist of outright sales, or a combination of both.

The White House did not comment on the plan to release oil.

US Energy Secretary Jennifer Granholm, on a trip to Europe last week, said the United States and its allies in the IEA were discussing another coordinated release from storage.

The IEA has called an emergency meeting for Friday to discuss oil supplies, a spokesman for Australia’s Energy Minister Angus Taylor said.

IEA member states agreed in early March to release over 60 million barrels of oil reserves, with 30 million barrels coming from the US SPR.

US crude futures fell $4.70 to $103.12 a barrel and Brent futures fell $4.45, or 3.9%, to $109 a barrel on news of the potential release. [O/R]

The White House said Biden would make comments at 1:30 p.m. ET (1730 GMT) on “his administration’s actions to reduce the impact of Putin’s price hike on energy prices and lower gas prices at the pump for American families.” It did not give any further details.

High gasoline prices are a political drag on Biden and his Democratic Party as they seek to retain control of Congress in November’s election.

The Biden administration is considering temporarily lifting restrictions on summer sales of higher-ethanol gasoline blends to lower fuel costs for US consumers, three sources familiar with the matter told Reuters.

Adding more ethanol to gasoline blends could potentially lower prices at US gas pumps, since corn-based ethanol is currently cheaper than straight gasoline.

(Reporting by Eric Beech, Jarrett Renshaw, Steve Holland and Timothy Gardner; Editing by Grant McCool and Himani Sarkar) The Biden administration is weighing the largest source of emergency oil reserves ever drawn


USTimeToday is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button