President Joe Biden said on Tuesday that the government will use strategic oil reserves as part of energy-consuming countries’ global efforts to quell the rapid rise in fuel prices in 2021.
The coordinated release between the United States, India, China, Japan, South Korea and the United Kingdom is the first of its kind.
In total, the United States will release 50 million barrels of oil from the SPR. Of these 32 million barrels, transactions will take place in the next few months, and 18 million barrels will accelerate previously authorized sales.
The White House said in a statement: “The president is ready to take additional actions when needed, and is ready to use all his powers to cooperate with the rest of the world to maintain adequate supplies when we emerge from the pandemic.”
Before the announcement on Tuesday, the government had stated for months that it was studying its disposable tools as West Texas Intermediate crude oil futures soared to a seven-year high of more than $85.
The price of the pump has followed the rise and is currently hovering near the highest level in seven years. According to data from AAA, the national average price of gasoline per gallon on Monday was 3.409 US dollars, higher than 2.11 US dollars a year ago.
“This is a timely move to try to reduce oil prices,” said John Kilduff, a partner at Again Capital. He added: “The increased supply should help make up for the production shortage before winter, especially if we also identify meaningful supplies from several major Asian consumer countries.”
According to data from the Department of Energy, as of November 19, SPR held 604.5 million barrels of oil in four locations. According to DofE, it will take 13 days after the president announces that oil has entered the market.
SPR was established in 1975 after the Arab oil embargo, and can hold a total of 727 million barrels.
According to DofE, SPR can be used in three ways: complete reduction in response to “serious energy interruptions,” limited reductions of up to 30 million barrels, or reductions for exchanges or trial sales.
After the announcement, US oil rebounded from its low point, falling 28 cents to US$76.50 per barrel. The international benchmark Brent crude oil price was US$79.98 per barrel, up 34 cents.
If you want to know more about business please go to https://updatednews24.com/category/business/