US set to unveil emergency oil release in a bid to tackle high prices


A maze of crude oil pipes and valves is pictured during a Department of Energy visit to the Strategic Petroleum Reserve in Freeport, Texas, United States, June 9, 2016. REUTERS / Richard Carson / File Photo

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Nov. 23 (Reuters) – The United States is expected to announce on Tuesday a loan of crude oil from its emergency stockpile as part of a plan it has worked out with major Asian energy consumers to reduce oil prices. energy, said a Biden administration source familiar with the situation. noted.

The move is aimed at containing soaring energy prices after the OPEC producer group and its allies fought back repeated requests from Washington and other consuming countries to pump faster to meet growing demand.

US President Joe Biden faces low approval rates due to high prices for gasoline and other consumer goods as part of the recovery from the coronavirus pandemic, posing a threat to him and his Democratic Party ahead of next year’s congressional elections.

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A so-called US Strategic Petroleum Reserve (SPR) “swap” will be announced Tuesday as part of a coordinated operation with several countries, the source said. The source did not specify how much oil would be released from stocks.

Biden has previously called on China, India, South Korea and Japan to release strategic oil stocks in concert with the United States. Japanese and Indian officials are working on ways to do so, Reuters reported. Read more

Washington’s unprecedented effort to team up with major Asian economies to lower energy prices is intended to warn major producers that they should pump more oil to address concerns over high fuel prices in the power savings.

OPEC +, which brings together the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, plans to meet on December 2 to discuss production policy.

The impact of a coordinated release of oil would depend on timing and quantity, but a release of over 60 million barrels or so in about 30 days would be viewed by the market as “very negative for prices,” Vivek said. , Commonwealth Bank of Australia analyst. Dhar.

“This situation comes at a time when this market was changing and global oil stocks are rising. So this could see prices drop more sharply than you think,” he said, highlighting new coronavirus lockdowns in Europe. Read more


The United States has historically worked with the Paris-based International Energy Agency (IEA), a bloc of 30 industrialized energy-consuming countries when global supply issues demand a coordinated release of stocks.

Japan and South Korea are members of the IEA, while China and India are only associate members.

Under an SPR swap, oil companies take crude oil from inventory but are required to return it – or the refined product – plus interest. Swaps are typically offered when oil companies are faced with a supply disruption such as a pipeline failure or hurricane damage.

Direct sales are less common.

US Presidents have authorized emergency sales of the SPR on three occasions, most recently in 2011 during a war in OPEC member Libya. Sales also took place during the Gulf War in 1991 and after Hurricane Katrina in 2005.

The current high prices were not caused by a disruption in supply, but rather by a rebound in global energy demand from lows reached during lockdowns at the start of the coronavirus crisis.

OPEC + has added about 400,000 barrels per day to the market on a monthly basis to meet growing demand, but has resisted Biden’s calls for faster increases, arguing the rebound in demand could be fragile.

The threat of a coordinated release of stored oil to the market, as well as new coronavirus-related lockdowns in Europe, recently took the crude oil upturn to its feet. Brent crude was last traded around $ 79.30 a barrel, down more than $ 7 from its high in late October.

Citigroup analysts estimated that a combined release of oil from the United States and other countries could be “in the range of 100 to 120 million barrels or more.”

A source close to the talks, however, said the contribution from China and other countries is still pending, and countries like India and South Korea would likely only contribute a small amount of barrels. .

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Reporting by Valerie Volcovici and Timothy Gardner; additional reporting by Sonali Paul in Melbourne; written by Richard Valdmanis; edited by Richard Pullin

Our Standards: Thomson Reuters Trust Principles.


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