U.S. to release 50 mln barrels of oil from emergency reserve – White House

Media Release
Washington, Nov. 23–White House on Tuesday said it would make 50 million barrels of oil available from the U.S. Strategic Petroleum Reserves to help cool oil prices.
The release, a combination of a loan and a sale from the reserve was being in made concert with other releases from strategic reserves by China, India, South Korea, Japan and Great Britain, the White House said.
The move is designed to tame soaring energy prices after the OPEC producer group and its allies rebuffed repeated requests from Washington and other consumer nations to pump more quickly to match rising demand.
U.S. President Joe Biden is facing low approval ratings due to high prices for gasoline and other consumer items in the recovery from the coronavirus pandemic, posing a threat to him and his Democratic party ahead of next year’s congressional elections.
A so-called “swap” from the U.S. Strategic Petroleum Reserve (SPR) will be announced on Tuesday in a move coordinated with several countries, the source said. The source did not specify how much oil would be released from the stockpiles.
Biden has already asked 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 that, Reuters reported. read more
The unprecedented effort by Washington to team up with major Asian economies to lower energy prices is intended as a warning to major producers that they should pump more oil to address concerns of high fuel prices in powerhouse economies.
OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, plans to meet on Dec. 2 to discuss output policy
The impact of a coordinated oil release would depend on the timeframe and quantity, but a release of more than about 60 million barrels in around 30 days would be seen by the market as “very negative for pricing”, said Commonwealth Bank of Australia analyst Vivek Dhar.
“This situation is coming at a time when this market was shifting and global oil stockpiles are rising. So this could see prices fall more steeply than you think,” he said, pointing to new coronavirus lockdowns in Europe. read more
OIL OFF HIGHS
The United States historically has worked with the Paris-based International Energy Agency (IEA), a bloc of 30 industrialized energy-consuming nations when global supply issues demand a coordinated release of stocks.
Japan and South Korea are IEA members, while China and India are only associate members.
Under an SPR swap, oil companies take crude oil from the stockpiles but are required to return it – or the refined product – plus interest. Swaps are typically offered when oil companies face a supply disruption like a pipeline outage or damage from a hurricane.
Outright sales are less common.
U.S. presidents have authorized emergency sales from the SPR three times, 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.
Current high prices have not been caused by a supply disruption, but rather a rebound on global energy demand from lows struck during lockdowns in the early days of the coronavirus crisis.
OPEC+ has been adding around 400,000 barrels per day to the market.

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