The U.S. Department of Energy announced it will release 50 million barrels of oil from the Strategic Petroleum Reserve to lower oil prices. This release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This has been well telegraphed with oil down roughly 10% from recent highs.
The move is seen by many as the epitome of ignorance of energy markets and the self serving nature of the current US Administration for election purposes. In a nutshell the US has strong armed other nations to release their SPR, what happens if oil prices go higher or we get further trade wars or supply crunches. It is not lost on most that much of the oil price shock is due to the Biden Administration policies.
The President announced in a statement this “culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent.
The U.S. Department of Energy will make available releases of 50 million barrels from the Strategic Petroleum Reserve in two ways:
32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs.
18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic.
Source: The White House
From The TradersCommunity US News Desk