Biden administration weighs biggest ever draw on emergency oil reserves

A U.S. postal worker puts on his seat belt after dropping off his vehicle at a gas station in Garden Grove, California, U.S., March 29, 2022. REUTERS/Mike Blake

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WASHINGTON, March 30 (Reuters) – The Biden administration plans to release up to 180 million barrels of oil over several months from the Strategic Petroleum Reserve (SPR), four U.S. sources said on Wednesday, as the House Blanche tries to lower fuel prices.

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

Releases have so far failed to depress prices as global demand has nearly reached pre-pandemic levels while supply has tightened globally.

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Oil prices have surged since Russia invaded Ukraine in late February, and the United States and its allies have responded by imposing heavy sanctions on Russia, the world’s second largest exporter of crude. Brent crude, the global benchmark, climbed to around $139 earlier this month, the highest since 2008, and was near $110 a barrel in Asian trading on Thursday.

President Joe Biden will deliver a speech on Thursday about his administration’s actions, the White House has announced.

Russia is one of the world’s leading oil producers, contributing about 10% to 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 from 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, a group of oil producers known as OPEC+ which includes Saudi Arabia and Russia, are to meet to discuss reducing oil prices. supply restrictions. The United States, Britain and others have previously urged OPEC+ to rapidly increase production.

However, OPEC+ is not expected to deviate from its plan to continue to gradually increase production when it meets on Thursday. Read more

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

The United States is considered a net oil exporter by the IEA. But that status could become a net importer this year and then back to an exporter as production has been slow to recover from the COVID-19 pandemic.

It was not immediately clear whether a drawdown of 180 million barrels would consist of exchanges of the reserve which would have to be replaced by oil companies at a later date, pure sales or a combination of the two.

The White House has not commented on the oil release plan.

US Energy Secretary Jennifer Granholm said during a trip to Europe last week that the US and its IEA allies were discussing a new coordinated release from storage. Read more

The IEA called an emergency meeting on Friday to discuss oil supply, a spokesman for Australian Energy Minister Angus Taylor said. Read more

IEA member states agreed earlier in March to release more than 60 million barrels of oil reserves, including 30 million barrels from the US SPR.

U.S. crude futures fell $4.70 to $103.12 a barrel and Brent crude futures fell $4.45, or 3.9%, to $109 a barrel at the announcement of the potential publication.

The White House said Biden will deliver a speech at 1:30 p.m. ET (5:30 p.m. GMT) on “his administration’s actions to reduce the impact of Putin’s price hike on energy prices and falling oil prices.” ‘gas at the pump for American families’. He gave no further details.

High gas prices are a political liability for Biden and his Democratic Party as they seek to retain control of Congress in the November election.

The Biden administration is considering temporarily removing restrictions on summer sales of high-ethanol blended gasoline to reduce fuel costs for U.S. consumers, three sources familiar with the matter told Reuters. Read more

Adding more ethanol to gasoline blends could potentially lower prices at U.S. gas pumps because ethanol, which is made from corn, is currently cheaper than straight gasoline.

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Reporting by Eric Beech, Jarrett Renshaw, Steve Holland and Timothy Gardner; Editing by Grant McCool and Himani Sarkar

Our standards: The Thomson Reuters Trust Principles.

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