Daily Management Review

Trump greenlights accessing US strategic oil reserve


09/16/2019


Donald Trump has allowed use of oil from the US strategic reserve to support the market. "I allowed use of oil from the reserve in volumes that should be enough to maintain a normal level of supply to the markets," his tweet reads.



Michael Vadon
Michael Vadon
In addition, US President said that he had instructed relevant agencies to expedite issuance of permits for the operation of oil pipelines in Texas and other states. Now they are under negotiation.

The Saturday attack on Saudi Aramco’s oil facilities resulted in a decrease in oil production in the kingdom. This is 50% of the country's production and 5% of the global volume. By September 16, Riyadh planned to restore production of 2 million barrels. Experts, however, fear a shortage in the oil market instead of the surplus previously forecasted by OPEC and IEA.

The strategic reserve is the privilege of President of the United States, and he can use it in the event of a serious violation of oil supplies. In the past, orders to use it were given three times. In 1991, George W. Bush used stock to maintain prices during Operation Desert Storm. Then the production of the two largest producers - Kuwait and Iraq - was disrupted.

In 2005, Bush Jr. made a similar decision. Then Hurricane Katrina disrupted production and transportation of raw materials in the Gulf of Mexico. Due to the hurricane, 25% of the US oil infrastructure was shut down.

In 2011, under Barack Obama, the strategic reserve was used as part of the IEA coordinated measures to release additional volumes of oil to the market. Compensation was required due to the war in Libya and other global tensions.

source: cnn.com






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