US President Joe Biden has announced the planned release of 50 million barrels of crude from the US Strategic Petroleum Reserve (SPR). The move is part of a coordinated effort with China, Japan, South Korea, and India to curb soaring energy prices. The White House stated on Tuesday that 32 million barrels of that amount would be released as an exchange over the next several months, while the remaining 18 million barrels will come from an accelerated release from previously authorized sales.
The Department of Energy will sell the released oil to eligible bidders, including major refiners and international trading houses. Bids for the exchange will close on December 6. The tender for the barrels up for sale will not be announced before December 17. The actual delivery would need weeks to take place after that tender. Bid winners are expected to receive their barrels from the program between late December 2021 and April 2022. Hence, the release is unlikely to immediately push down prices. In addition, the DOE has not specified details regarding what grade of crude will be offered.
Japan and India indicated they would release 5 million barrels from their reserves. China said it is working on a release but did not disclose the volume. Analysts said Beijing could release between 7 million and 15 million barrels from its reserves. South Korea said it had not decided the volume of the release, while the UK will reportedly contribute less than 2 million barrels to the coordinated release. Analysts said while these countries added only small volumes, it indicated that they were willing to cooperate against OPEC+ reign over markets.
Oil futures in New York dropped 1.9% after the announcement before paring losses to $76.39 per barrel. The coordinate release is also expected to weigh on fuel prices, which have been fueling inflation. Unleaded gasoline prices in the US averaged $3.403 per gallon as of November 22, the highest in seven years.
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Published on November 24, 2021 11:18 AM (GMT+8)Last Updated on November 24, 2021 11:18 AM (GMT+8)
