The United States announced the release of 50 million barrels of oil from its strategic reserves, hoping to push down oil prices in response to OPEC+’s ignorance of repeated requests from the international community to increase production. The action to challenge the oil group this time is to join forces with China, India, the United Kingdom, South Korea and Japan. Oil prices first fell and then rose. London Brent oil prices fell more than 1% and then returned to the $80 level. WTI New York oil prices rose more than 1%.
India also announced the release of 5 million barrels of oil. The Financial Times quoted the British government as saying that 1.5 million barrels of oil would be released. According to “Bloomberg”, China will release between 7 million and 15 million barrels. South Korea said that details will be announced after discussions with the United States and other allies. The initial intention is 3.5 million barrels. Japan will announce this Wednesday (24th), but it should not exceed 5 million barrels.
Amrita Sen, one of the founders of Energy Aspects, an energy consulting company, described this time as an absolute political move. The Asian allies are purely symbolic to release a small amount of oil reserves.
Faced with the strongest inflationary pressure in 30 years, US President Biden stated that reversing high inflation is his top priority. Earlier he asked OPEC+ to increase production significantly, but was rejected, only increasing production in December by 400,000 barrels per day.
Reuters quoted OPEC+ news as saying that the United Kingdom, India, etc. actually did not release much. The United States had previously stated that it would release oil reserves, and this announcement has been less than expected.
Some Republicans criticized Biden for improper handling, believing that the United States should be concentrated on encouraging increased production in the United States, and only use oil reserves when there is a real supply crisis.
US officials pointed out that this time the oil reserves were lent or sold in the form of swaps. In addition to repaying the oil in the future, oil companies must also repay interest. Direct sales of oil reserves are relatively rare and usually involve wars or after huge disasters, such as after Hurricane Katrina hit in 2005. Oil prices have risen by more than 50% this year.