President Joe Biden will announce on Wednesday that he is releasing the final 15 million barrels from a record release of US strategic oil reserves, with further releases possible if energy prices rise, a senior US official said.
The new tranche of oil from the Strategic Petroleum Reserve will “complete the release of 180 million barrels approved in the spring” in response to price hikes linked to Russia’s invasion of Ukraine, a senior US official said on Tuesday.
The order, which Biden is set to announce in a speech, means the president will “make it clear that the administration stands ready to make significant additional … sales this winter if, as a result of Russian or other measures disrupting global markets, required are”. officially added.
The decision to make the largest-ever intrusion into emergency oil reserves — which are normally saved for responding to situations like hurricane-related oil refinery shutdowns — was Biden’s move to calm energy markets and protect the world’s largest economy from war shocks in Ukraine .
Big energy exporter Russia was hit by US and European sanctions shortly after it invaded Ukraine in February, causing turmoil in markets. In addition, the Kremlin has threatened to use its hold over energy supplies as an economic weapon against the West, which is backing Ukraine’s fight to ward off the invasion.
There are serious domestic concerns for Biden, as gas prices at one point averaged more than $5 a gallon, sparking anger across the country. While prices have slowed since then, inflation remains the biggest factor driving Republican hopes of defeating Democrats in November’s general election.
– Reserves in good condition –
The senior official, who spoke on condition of anonymity, stressed that the Strategic Petroleum Reserve was not being used irresponsibly.
Simultaneously with announcing the offtake of 15 million barrels for December delivery — and hinting at the possibility of more deliveries — Biden is highlighting a plan to replenish the reserve once prices reach around $67-$72 a barrel, he said official said.
This is “an important signal to producers that the SPR will help moderate and stabilize price flows not only when prices are high, but also when prices are low,” he said.
The reserve, meanwhile, remains in good shape at more than 400 million barrels, the official said. “That’s still a big amount” and allows for “additional opportunities…if we need to make more sales.”
The official described the use of SPR as a “brilliant” bridge out of a moment of crisis, playing “an incredibly constructive role at a very challenging time”.
With expected “extra volatility” from Russia and production levels still not returning to pre-Covid levels, stability “isn’t quite there yet.”
When asked if the United States could take the more radical measure of curbing fuel exports — something that would help depress domestic prices but hurt foreign buyers, including in allied countries — an official declined to confirm or to deny.
“We’re leaving all the tools on the table,” said the official, who also spoke on condition of anonymity.
