President Joe Biden will announce the release of 15 million barrels of oil from the US strategic reserve on Wednesday as part of a response to recent production cuts announced by the Organization of the Petroleum Exporting Countries (OPEC+) nations.
As per Washington Post, he will say more oil sales are possible this winter, as his administration rushes to be seen as pulling out all the stops ahead of next month’s midterm elections.
Biden will deliver remarks on Wednesday to announce the drawdown from the strategic reserve, senior administration officials said Tuesday on the condition of anonymity to outline Biden’s plans.
It completes the release of 180 million barrels authorized by Biden in March that was initially supposed to occur over six months. That has sent the strategic reserve to its lowest level since 1984 in what the administration called a “bridge” until domestic production could be increased. The reserve now contains roughly 400 million barrels of oil, reported Washington Post.
Biden will also open the door to additional releases this winter in an effort to keep prices down. But administration officials would not detail how much the president would be willing to tap, nor how much they want domestic and production to increase in order to end the drawdown.
Biden will also say that the US government will restock the strategic reserve when oil prices are at or lower than USD 67 to USD 72 a barrel, an offer that administration officials argue will increase domestic production by guaranteeing a baseline level of demand, reported Washington Post.
The prospective loss of 2 million barrels a day — 2 per cent of global supply — has had the White House saying Saudi Arabia sided with Russian President Vladimir Putin and pledging there will be consequences for supply cuts that could prop up energy prices.
The 15 million-barrel release would not cover even one full day’s use of oil in the US, according to the Energy Information Administration.
Biden during his visit to Saudi Arabia in July had expressed optimism that Saudi Arabia would take steps to boost the global oil supply in the coming weeks, which had been viewed as a major goal of the trip given high domestic gas prices globally due to the ongoing conflict between Russia and Ukraine.
However, OPEC’s decision has now made the White House rethink its relationship with Saudi Arabia. OPEC’s decision can be viewed in another light as well — mid-term elections in the US. Oil production cuts come on the heels of midterm elections and inflation will be the one thing on top of voters’ minds.
After the OPEC+ announcement last Wednesday, a top Democrat Senator Dick Durbin of Illinois, said that Saudi Arabia “clearly” wants Russia to win the war in Ukraine and added, “Let’s be very candid about this: it is Putin and Saudi Arabia against the United States.”
“I think it’s time for us to imagine a foreign policy where we do not count on Saudi Arabia,” Durbin said terming the decision “as clear a declaration by the Saudis that they are on the other side of history as we can ask for.”
Members of OPEC+ said that they would cut November production quotas by two million barrels per day, citing the “uncertainty that surrounds the global economy and oil market outlooks”.
“We (OPEC+) are here to stay as a moderating force, to bring about stability,” Saudi Arabian energy minister Abdulaziz bin Salman Al Saud had said during a news conference.
An OPEC+ memo outlining cuts shows that Saudi Arabia and Russia will make the biggest individual reductions of the 19 countries doing so, lowering output by 526,000 monthly barrels apiece.