The US has announced that it will release 50 million barrels of oil from its reserves to curb rising energy and gasoline prices. The move is in line with other major oil-consuming countries, including China, India, Japan, South Korea, and the UK.
US President Joe Biden has repeatedly urged the OPEC group of oil-producing nations to increase output more quickly. But OPEC is sticking to a deal to increase production only gradually. He said he was concerned that the resumption of coronavirus cases could reduce demand, as has happened amid the pandemic.
Crude oil prices peaked seven years ago while global demand rose sharply as the economy recovered from the coronavirus crisis.
This has led to rising gasoline prices and energy bills in many countries. A White House statement said: “US consumers are feeling the impact of rising gas prices on their pumps in their home heating bills. As well as US businesses as oil supply is not keeping up with demand.
“That is why President Biden is using all available instruments to lower prices and combat shipping bottlenecks.
India will release five million barrels, while South Korea, Japan. And China will announce the amount and timing of their release on time. Officials said it was the first time the United States had coordinated such a move with some of the world’s biggest oil consumers. However, analysts doubt whether this will have a significant impact.
“It’s not big enough to significantly lower prices and could even backfire if it causes OPEC+ [including Russia] to slow down the pace of production growth,” said Caroline Bain, chief economist for Commodities at Capital Economics.
But Washington’s efforts to partner with other major economies to lower energy prices warned OPEC. And other major producers to address concerns about high crude prices, which have surged more than 50 percent this year.
OPEC+, which includes significant producers such as Saudi Arabia and Russia. Has repeatedly rejected requests to pump more oil at its monthly meetings, causing frustration in the US.
“We will continue to talk with international partners about this issue,” a senior US administration official told reporters Tuesday. “The president is ready to take further action if necessary and is prepared to use his full powers and work in coordination with the rest of the world.
Commerzbank analyst Carsten Fritsch said the move could rethink the OPEC+ strategy. And a deal to increase production at next week’s meeting.