After OPEC+ producers repeatedly disregarded demands for extra petroleum, US President Joe Biden's administration stated on Tuesday that it will release millions of barrels of oil from strategic reserves in collaboration with China, India, South Korea, Japan, and the United Kingdom to attempt to temper prices.
Biden, who is facing poor ratings and increasing inflation ahead of next year's legislative elections, has been irritated at the Organization of Petroleum Exporting Countries and its Allies, or OPEC+, for failing to respond to his repeated requests for more oil.
"I told you before that we're going to take action on these problems. That's exactly what we're doing," Biden said in remarks broadcast from the White House.
"It will take time, but before long you should see the price of gas drop where you fill up your tank, and in the longer-term we will reduce our reliance on oil as we shift to clean energy," he said.
Crude oil prices have just reached seven-year highs, and consumers are feeling the pinch as a result of the price hike. Retail gasoline prices have risen by more than 60% in the last year, the fastest pace of growth since 2000, owing to a return to the roadways as pandemic-induced restrictions have been lifted and demand has recovered.
The US will release 50 million barrels under the plan, which is enough to meet US demand for two and a half days. Meanwhile, India said it would release 5 million barrels, while Britain said it would enable 1.5 million barrels of oil from privately owned reserves to be released voluntarily.
By the end of the year, Japan will auction off around 4.2 million barrels of oil from its national stockpile, or about 1 or 2 days' worth of demand, according to the Nikkei newspaper.
The amount of oil released by South Korea and China, as well as the date of its release, was not disclosed. Seoul stated that it will make a decision after consulting with the US and other allies.
The price of oil rose on Tuesday after declining for many days as market speculation about the plans spread.
Some experts blamed the market's recovery on a lack of concrete information from China, despite Reuters reporting last week that the government was working on such a release. Brent oil prices jumped 3.3 percent to $82.31 a barrel on Tuesday.
Officials claimed it was the first time the US has coordinated such a move with some of the world's top Asian oil customers.
At its monthly meetings, OPEC+, which includes Saudi Arabia and other Gulf allies as well as Russia, has turned down calls to pump more. It will meet again on Dec. 2 to debate policy, but no indication has been given that it will shift course.
The group has been struggling to fulfill current objectives under its agreement to gradually boost output by 400,000 barrels per day (bpd) each month - a rate that Washington considers too sluggish - and it is still concerned that a rebound of coronavirus infections would drive down demand once again.
Recent high oil prices are the result of a dramatic resurgence in global demand, which had cratered early in the epidemic in 2021, and analysts have warned that releasing stockpiles may not be enough to keep prices from rising higher.
"It's not large enough to bring down prices in a meaningful way and may even backfire if it prompts OPEC+ to slow the pace at which it is raising output," said Caroline Bain, chief commodities economist at Capital Economics Ltd.
The US initiative to cut energy costs by partnering with large Asian nations serves as a reminder to OPEC and other major producers that they must address concerns about high crude prices, which have risen by more than 50% this year.
"It sends a signal to OPEC+ that the consuming nations are not going to get pushed around anymore by them," said John Kilduff, partner at Again Capital LLC in New York. "OPEC+ has been stingy with their output for months now."
Suhail Al-Mazrouei, the UAE's energy minister and one of OPEC's major producers, stated before the details of the US reserve release were revealed that raising UAE production for global markets made "no sense."
According to an OPEC+ source, releasing reserves would make calculations more difficult for OPEC+, which monitors the market on a monthly basis. They, as well as a number of market professionals, believe the announcement was not as significant as the headline statistic suggests. They said that because the UK and India were only releasing small amounts and the US had previously announced certain releases, the new quantity was lower than planned.
(Source:www.afr.com)
Biden, who is facing poor ratings and increasing inflation ahead of next year's legislative elections, has been irritated at the Organization of Petroleum Exporting Countries and its Allies, or OPEC+, for failing to respond to his repeated requests for more oil.
"I told you before that we're going to take action on these problems. That's exactly what we're doing," Biden said in remarks broadcast from the White House.
"It will take time, but before long you should see the price of gas drop where you fill up your tank, and in the longer-term we will reduce our reliance on oil as we shift to clean energy," he said.
Crude oil prices have just reached seven-year highs, and consumers are feeling the pinch as a result of the price hike. Retail gasoline prices have risen by more than 60% in the last year, the fastest pace of growth since 2000, owing to a return to the roadways as pandemic-induced restrictions have been lifted and demand has recovered.
The US will release 50 million barrels under the plan, which is enough to meet US demand for two and a half days. Meanwhile, India said it would release 5 million barrels, while Britain said it would enable 1.5 million barrels of oil from privately owned reserves to be released voluntarily.
By the end of the year, Japan will auction off around 4.2 million barrels of oil from its national stockpile, or about 1 or 2 days' worth of demand, according to the Nikkei newspaper.
The amount of oil released by South Korea and China, as well as the date of its release, was not disclosed. Seoul stated that it will make a decision after consulting with the US and other allies.
The price of oil rose on Tuesday after declining for many days as market speculation about the plans spread.
Some experts blamed the market's recovery on a lack of concrete information from China, despite Reuters reporting last week that the government was working on such a release. Brent oil prices jumped 3.3 percent to $82.31 a barrel on Tuesday.
Officials claimed it was the first time the US has coordinated such a move with some of the world's top Asian oil customers.
At its monthly meetings, OPEC+, which includes Saudi Arabia and other Gulf allies as well as Russia, has turned down calls to pump more. It will meet again on Dec. 2 to debate policy, but no indication has been given that it will shift course.
The group has been struggling to fulfill current objectives under its agreement to gradually boost output by 400,000 barrels per day (bpd) each month - a rate that Washington considers too sluggish - and it is still concerned that a rebound of coronavirus infections would drive down demand once again.
Recent high oil prices are the result of a dramatic resurgence in global demand, which had cratered early in the epidemic in 2021, and analysts have warned that releasing stockpiles may not be enough to keep prices from rising higher.
"It's not large enough to bring down prices in a meaningful way and may even backfire if it prompts OPEC+ to slow the pace at which it is raising output," said Caroline Bain, chief commodities economist at Capital Economics Ltd.
The US initiative to cut energy costs by partnering with large Asian nations serves as a reminder to OPEC and other major producers that they must address concerns about high crude prices, which have risen by more than 50% this year.
"It sends a signal to OPEC+ that the consuming nations are not going to get pushed around anymore by them," said John Kilduff, partner at Again Capital LLC in New York. "OPEC+ has been stingy with their output for months now."
Suhail Al-Mazrouei, the UAE's energy minister and one of OPEC's major producers, stated before the details of the US reserve release were revealed that raising UAE production for global markets made "no sense."
According to an OPEC+ source, releasing reserves would make calculations more difficult for OPEC+, which monitors the market on a monthly basis. They, as well as a number of market professionals, believe the announcement was not as significant as the headline statistic suggests. They said that because the UK and India were only releasing small amounts and the US had previously announced certain releases, the new quantity was lower than planned.
(Source:www.afr.com)
