administration biden is considering publication 1 million barrels of oil daily for several months by the US Strategic Petroleum Reserve to fight inflation and the rise in oil prices: a source close to the White House tells Reuters.
Rumor has it that the move could cover part of the reserves, which may reach 180 million barrels. This is an announcement intended to show that Washington is being cornered Peak Opec+ and keen for rival Russia’s oil revenues to be damaged, it wants to control the rise in oil prices, like other commodities that have been on the run since the conflict in Ukraine. Following the rumors, WTI futures fell more than 6% to $101.50 a barrel, while those on the Brent They left over 45% at $108.36.
The US Strategic Petroleum Reserve currently holds 568.3 million barrels, the lowest amount since May 2002, according to the US Department of Energy. The United States is consuming just under 20 million barrels per day on average, a sign that even with a gradual release of reserves, the country would be well supplied to meet demand. The Strategic Petroleum Reserve has a capacity of about 715 million barrels in its tanks distributed between Louisiana and Texas and represents the world’s largest crude oil reserve. In recent years, Washington has kept reserves as close to full as possible to avoid price shocks or falls withstand disruptions in demand.
At current market prices, the value of oil reserves stored in the SP is close to i 60 billion dollars and given the withdrawal capacity from the tanks at just under 4.5 million barrels per day, even at full extraction rate, it would take almost five months to empty them. The US goal in this case is not so much to fix a supply shock like that related to the energy embargo against Russia, but rather to dilute and make the global crude oil market more liquid by trying to avoid the encirclement of Moscow and the US to break through OPEC countries that don’t want to hear about it increase production significantly to reduce the price. This wouldn’t be the first time in recent months: In November, Biden gave the Department of Energy a mandate to release 50 million barrels as a guarantee against price spikes. Recently, he has sought further efforts 30 million barrels in a coordinated effort with nonOPEC allies to bring 60 million barrels to market. The current move is to advance price control with increasing gradualness. In other words, a oneshot release signals a willingness to reassure markets about the risk of a supply crisis; a gradual release of Spr instead manifests a more gradual price control maneuver.
In addition, the OPEC+ meeting will certify a maneuver not very dissimilar to the previous strategy of gradually increasing production, reaching growth of 400,000 barrels a day per month for the whole of 2022. Biden wants to accelerate this trend and try to use its consequences for geoeconomic purposes to reduce Russia’s energy yield, favored by the context of high global and domestic prices: a drop in oil prices can bring about a reduction in the Gasoline prices and therefore ofInflation hitting hard the US economy. While midterm elections With unfavorable poll numbers and the looming crushing defeat of the Democratic Party at the hands of Republican opponents in both the House of Representatives and Senate, Biden is taking cover by calming the internal reverberations of a situation of great chaos on a global scale. And the oil movement can be a viaticum, albeit not a definitive one, to find a way out. Never before have the country’s inner front and the outer front been so closely linked as in this phase.
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