President Joe Biden will announce Wednesday he’s putting the final 15 million barrels on the market from a record release of US strategic oil reserves, with more releases possible if energy prices spike, a senior US official said.
The new tranche of oil from the Strategic Petroleum Reserve will be “completing the 180 million barrel release authorized in the spring,” in response to price hikes linked to Russia’s invasion of Ukraine, a senior US official said Tuesday.
The order, which Biden will announce in a speech, means the president will be “making clear that the administration is prepared to undertake significant additional… sales this winter if they are needed due to Russian or other actions disrupting global markets,” the official added.
The decision to make the biggest ever dip into the emergency oil reserves — usually kept for responding to situations such as hurricane-related shutdowns at oil refineries — was Biden’s gambit to calm energy markets and shield the world’s biggest economy from Ukraine war shocks.
Major energy exporter Russia was hit with US and European sanctions soon after it invaded Ukraine in February, causing turmoil on markets. In addition, the Kremlin has threatened to use its leverage over energy supplies as an economic weapon against the West, which supports Ukraine’s fight to repel the invasion.
For Biden there are serious domestic concerns, with gasoline prices at one point averaging more than $5 a gallon, causing nationwide anger. While prices have since moderated, inflation remains the biggest factor driving Republican hopes of defeating the Democrats in November’s midterm legislative elections.
– Reserves in good shape –
The senior official, who spoke on condition of anonymity, stressed that the Strategic Petroleum Reserve was not being used irresponsibly.
At the same time as announcing the 15 million barrel drawdown for delivery in December — and flagging the possibility of more to come — Biden is highlighting a plan to refill the reserve as soon as prices hit around $67-72 a barrel, the official said.
This is “an important signal for producers that the SPR will be part of helping to moderate and stabilize price flows, not only when prices are going high but when prices are going low,” he said.
The reserve, meanwhile, remains in good shape, the official said, with more than 400 million barrels. “That is still a large amount” and allows for “additional opportunity… if we need to do more sales.”
The official described the SPR use as a “brilliant” bridge out of a crisis moment, playing “an incredibly constructive role through a very challenging time period.”
However, with “additional volatility” expected from Russia and production levels still not back to pre-Covid pandemic levels, stability is “not quite there yet.”
Asked whether the United States could take the more radical measure of curbing fuel exports — something that would help tamp down domestic prices but hurt foreign buyers, including in allied countries — an official declined to confirm or deny.
“We’re keeping all tools on the table,” the official, who also spoke on condition of anonymity, said.
But with the midterm vote just three weeks away, Republicans are seeking to paint Biden as a manipulator of the oil reserves in order to win support for his Democrats.
The move is not an effort to steady markets, “it’s a bid to try and save his party from getting walloped in the Midterm elections,” House Republican Byron Donalds tweeted, adding that “Biden’s mismanagement of our strategic oil reserves is a dire threat to national security.”
