February 5, 2023

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The United States releases 1 million barrels of oil a day from stockpiles to raise fuel prices

The United States releases 1 million barrels of oil a day from stockpiles to raise fuel prices

US President Joe Biden plans to market one million barrels of oil from strategic reserves every day for the first six months of May. In total, this is 180 million barrels of oil.

The US President explained his plans in a speech, which you can see here (without verses):

Oil companies receive crude oil from reserves and then return it to the government – including interest. Spread over salt caves in Texas and Louisiana, the oil currently comes from the US Strategic Petroleum Reserve (SPR), which is believed to be worth 568 million barrels. Oil reserves have been built since 1973 and are commonly used in emergencies such as hurricanes, and in the wake of shock waves on the world market.

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However, they have already been hit twice in the last few months.

It first happened (for the first time in 10 years) in the fall of last year, just before the end of the year celebrations. Then 50 million barrels were released from stock to raise the price of the pump and fight inflation. Following Russia’s occupation of Ukraine, Biden pledged a further 30 million barrels of oil from reserves to stabilize the world energy market.

So now the US president is shifting one gear by placing 180 million barrels on the market in six months, which is the maximum number taken from stock.

With this significant move, Biden hopes to reduce fuel prices. They have risen since the war in Ukraine, which has hurt Americans and affected the president’s popularity. “By-elections”, in the view of the by-elections, are certainly something to be avoided.

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“As domestic production increases, the move will provide a historic sum for the bridge until the fall,” the White House said in a statement. Proceeds from the sale of oil will be used to fill stocks in the coming years.

Penalty

But tapping the reserves is far from the only action announced by Pita. He also urged the United States to pump more oil on its own. “In the long run, we need to become energy-neutral,” he said. Oil companies that refuse to pump more oil – because prices fall when more oil is available – will be fined.

The US government will ask the International Energy Agency (IEA) to consolidate the reserves of other oil countries. The British could also liberate part of their oil reserves. Oil-producing countries are united in OPEC + and are currently sticking to their planned production allocations.

The leak of today’s new plans, after rising in recent days, was enough to cut oil prices by about 5 percent in a matter of minutes.

U.S. strategic oil reserve output could also lower the price of diesel and gasoline for us, says Frank Wrongen, strategist at De Rothschild Property Manager. “If you release 1 million barrels of oil a day, you are bringing extra oil to the market, knowing that the production of OPEC countries is 30 million barrels per day. Thus, global demand will decrease slightly. Even if it’s a little less than the Americans, we can still get cheaper. “

Listen to Reporter Björn Soenens in the United States via Radio 1 Select

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Source: vrtnws And the world today