US, China, others target OPEC with possible reserves release – Community News
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US, China, others target OPEC with possible reserves release

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SINGAPORE/WASHINGTON — Governments of some of the world’s largest economies said on Thursday they were looking at releasing oil from their strategic reserves, following a rare request from the United States for concerted action to lower global energy prices. and prior to a meeting of major oil-producing countries.

The Biden administration has asked big oil buyers like India https://www.reuters.com/business/energy/exclusive-us-asks-big-countries-coordinate-releases-oil-reserves-sources-2021-11-17 and Japan — as well as China for the first time — to consider releasing stockpiles of crude oil, several people familiar with the requests told Reuters on Wednesday. Oil prices fell on the news.

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As the global economy recovers from the pandemic, Washington is frustrated that producers in OPEC+, the Organization of Petroleum Exporting Countries and allies such as Russia, have turned down US requests to accelerate oil supplies.

With gasoline prices and other costs rising, US President Joe Biden is also under political pressure ahead of next year’s midterm elections. A Reuters poll in October found that 67% of American adults agreed that inflation is a very big concern.

OPEC+ plans to meet on December 2. The group has taken a slower approach to boost production, as the economic recovery is too fragile to justify increased supply.

The price of oil fell about 4% to its lowest point in six weeks after Reuters reported on the US request and China’s decision to release some crude, before regaining some ground later on Thursday. Oil prices have retreated from recent highs in anticipation of global inventories rising.

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“The market will remain nervous as it awaits a release,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

China’s state reserve agency https://www.reuters.com/business/energy/exclusive-china-reserve-bureau-working-crude-oil-release-2021-11-18 told Reuters it was working on releasing crude oil reserves , but declined to comment on the US request.

The United States has the largest strategic reserve with more than 600 million barrels. The US SPR https://www.reuters.com/business/energy/what-is-spr-emergency-oil-stash-biden-may-tap-2021-11-18 was founded in the 1970s after the Arab oil Embargo to ensure the nation had sufficient supplies to weather an emergency. In recent years, the shale boom has pushed US production to rival that of Saudi Arabia and Russia.

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A CHALLENGE FOR OPEC

By involving China for the first time, this proposal poses an unprecedented challenge to OPEC, the cartel that has influenced oil prices for more than five decades. China is the world’s No. 2 oil consumer and largest importer.

There was no immediate official response from OPEC+ members. The group has increased production by 400,000 barrels per day per month, phasing out the record production cuts made in 2020, when the pandemic plunged fuel demand.

This week Secretary-General Mohammad Barkindo said OPEC expects a surplus of oil stocks to emerge next month. In September, exports from Saudi Arabia rose to 6.52 million barrels per day, the highest level since January.

An OPEC source, who declined to be named, said it would be surprising to see consuming countries release inventories to lower prices rather than deal with a supply shortage.

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However, several major energy consumers in the world have urged OPEC to increase the supply. China chose to release reserves in September to try to stabilize prices. India has been frustrated for months and cut purchases from Saudi Arabia sharply in the spring due to rising costs.

“This is not a case of unavailability of supplies,” Indian Oil Minister Hardeep Singh Puri told a conference in Dubai on Wednesday. “There are 5 million barrels a day of stocks available that have not been released for whatever reason.”

CHINA IN, IEA OUT

The United States and its allies have previously coordinated the release of strategic petroleum reserves, such as in 2011 when the supplies were hit by a war in OPEC member Libya. Coordination was done through the Paris-based energy watchdog, the International Energy Agency, of which the United States, Japan and many European countries are members.

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However, the United States has not asked the European Union for its participation, according to a source familiar with discussions, saying Europe’s biggest problem is linked to higher natural gas prices.

The IEA said on its website that such publications are not intended for price intervention. Both Japan and South Korea were approached by the United States, and both said they are not releasing reserves simply to cope with rising prices.

If China makes its release in coordination with other countries, it would be the first time, said Sengyick Tee, an analyst at Beijing-based consultancy SIA Energy.

(Reported by Tim Gardner in Washington, Yang Heekyong in Seoul, Aaron Sheldrick and Yuka Obayashi in Tokyo, Chen Aizhu in Singapore, Nidhi Verma in Delhi, Florence Tan in Singapore and Muyu Xu in Beijing, Ahmad Ghaddar in London, Jessica Resnick Ault in New York, Swati Verma and Kavya Guduru in Bengaluru, Alex Lawler in Abu Dhabi and Olesya Astakhova in Moscow; adapted by David Gaffen, Stephen Coates, David Clarke and David Gregorio)

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