WASHINGTON: The United States said yesterday it would release millions of barrels of oil from strategic reserves in co-ordination with China, India, South Korea, Japan and Britain, to cool prices after Opec+ producers repeatedly ignored calls for more crude.
US President Joe Biden, facing low approval ratings amid rising inflation ahead of next year’s congressional elections, has repeatedly asked the Organisation of the Petroleum Exporting Countries and its allies, known as Opec+, to pump more oil.
Yesterday’s announcement that the US would release 50 million barrels was made after an official said Washington had approached major Asian energy consumers in an attempt to drive down oil prices from near three-year highs. Britain had not previously been mentioned as being involved.
It was the first time Washington had coordinated such a move with some of the world’s largest oil consumers, officials said.
Opec+, which includes Saudi Arabia and other US allies in the Gulf, as well as Russia, has rebuffed requests to pump more at its monthly meetings. It meets again on Dec. 2 to discuss policy but has so far shown no indication it will change tack.
The group has been struggling to meet existing targets under its agreement to gradually increase production by 400,000 barrels per day (bpd) each month – a pace Washington sees as too slow – and it remains worried that a resurgence of coronavirus cases could once again drive down demand.
Current high prices have been caused by a sharp rebound in global demand, which cratered last year, early in the pandemic.
The release from the US Strategic Petroleum Reserve would be in a loan and a sale to companies, US officials said. The 32m barrels loan will take place over the next several months, while the administration would accelerate a release of 18m barrels in sales already approved by Congress.
“We will continue talking to international partners on this issue. The president stands ready to take additional action if needed, and is prepared to use his full authorities working in coordination with the rest of the world,” a senior US administration official told reporters.
India said it would release 5m barrels, while Britain said it would allow the voluntary release of 1.5m barrels of oil from privately-held reserves.
South Korea said details on the amount and timing of the release of oil reserves would be decided after discussions with the US and other allies. Japanese media said Tokyo would detail its plans today.
Benchmark Brent crude was trading above $80 a barrel yesterday, up from its levels before the announcement but still well below last month’s three-year high of more than $86.
An Opec+ source and several market analysts said the release was not as big as the headline figure suggested. On the figures announced, they said Britain and India were releasing modest amounts and the US had already announced some releases and so the additional quantity was less than expected.