The US will release 50 million barrels of crude oil from its strategic reserves in concert with China, Japan, India and South Korea and the UK – an unprecedented, coordinated effort by the world’s largest oil consumers to tame prices that could see a backlash from OPEC+ could cause .
Of that amount, 32 million will be released from the US Strategic Petroleum Reserve as an exchange in the coming months, while 18 million will be as an accelerated release of previously approved sales, the White House said in a statement Tuesday.
An official in the Biden administration told reporters on Tuesday that the barrels would start moving as early as mid- to late-December. The administration is ready to take further unspecified steps if necessary, the White House said.
West Texas Intermediate crude for January delivery fell 1.5% to $75.61 a barrel as of 7:19 a.m. in New York.
The decision to collectively unload the stored crude after OPEC+ countries rejected calls to significantly increase production marks a diplomatic victory for the US and a challenge to the hold that Saudi Arabia, Russia and other OPEC+ producers have taken. have on the market.
But it is not without risk. OPEC+ officials warned they are likely to respond by canceling plans to ramp up their own production, wiping out the addition of stored oil to the market. The deadlock is fueling a battle for control of the global energy market.
The struggle threatens to rage the geopolitics of oil. The price of the world’s most important commodity is at stake as politicians and central bankers face the steepest rise in inflation in more than a decade. It also shows the strained relationship between Washington and Riyadh, traditionally a cornerstone of US relations in the Middle East.
President Joe Biden has been pushing for the joint release for weeks, including during a virtual summit with Chinese President Xi Jinping. Ultimately, China was one of the countries that agreed to the move, which represents the largest privately controlled discharge of stored crude oil from major economies. Previous global efforts to tap supplies, such as the release of 60 million barrels in 2011 following the turmoil and supply disruptions in Libya, have been coordinated by the International Energy Agency.
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