- BBC News World
The White House gave the green light this Thursday to the largest release to the market of strategic oil reserves in the country’s history.
The president of the United States, Joe Biden, announced that he will make available to the market up to 180 million barrels of US crude reserves over a period of six months, a move of an unprecedented scale with which the government seeks to reduce the high cost of fuel and combat the wave of inflation.
The decision, which will try to alleviate the shortage of crude oil caused by the war in Ukraine, is the largest since the reserve was created in 1974.
However, it is unlikely that the release of around 1 million barrels per daycompletely solve the current energy crisis, analysts say.
Biden promised more action to boost US energy production, saying the oil release would “serve as a bridge to the end of the year, when domestic production rises.”
The president also asked companies to make investments to accelerate the adoption of greener energy sources.
News of the US plans came as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, were meeting on Thursday.
After just 12 minutes of deliberation, the group of major oil-producing nations said it would stick to its existing agreement to gradually increase output.
“The consensus on the outlook pointed to a well-balanced market,” OPEC+ said in a statement.
“The current volatility is not caused by fundamentals, but by ongoing geopolitical developments.”
The decision comes despite pressure from the US, UK and some members of the group for a further increase in production.
a political issue
The high cost of fuel has become a global political issue, especially in the US, which will elections legislative in November.
Following Biden’s announcement, the benchmark US oil index (West Texas Intermediate), fell by approximately 4.7%, while the Brent Crude index followed a similar trend.
“While the stock announcement will help control prices in the short term, we believe it will take an increase in global production to cause a sustained decline in prices,” said Edward Gardner, a commodity economist at Capital Economics.
The challenge for the West is how to achieve greater availability of crude oil on the markets to compensate for the loss of supplies of Russia, the second largest oil exporter of the world after Saudi Arabia.
The world’s largest oil producer
Brent crude hit $139 a barrel earlier this month after Russia’s invasion of Ukraine and sanctions imposed on Moscow by the United States and its allies.
Energy prices have since receded, but the price of oil is still nearly 70% higher than a year ago.
Global energy supplies had been tightening for months as economies began to recover from the Covid-19 pandemic.
But, with the war in Ukraine, the situation has been made worse by expectations that Russian oil exports could drop as low as 3 million barrels a day.
Most other major energy-producing nations are either at full capacity or unwilling to increase production.
United States, which is largest oil producer The world currently pumps 11.7 million barrels of oil a day, but that’s not enough to meet global demand.
The International Energy Agency (IEA) has called an emergency meeting for this Friday.
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