Following OPEC’s cut, Biden is releasing 10 million more barrels of oil from the US Strategic Petroleum Reserve.
Following a declaration by OPEC on October 5 that the cartel would reduce oil output, President Joe Biden’s administration would release 10 million extra barrels of oil from the US Strategic Petroleum Reserve.
It was made just hours after the Organization of Petroleum Exporting Countries (OPEC) declared a 2 million barrel per day decrease in oil output. The drop is a blow for Biden, who visited Saudi Arabia in July to press the country to increase output in the face of historically high US gas prices.
Due to production cuts, oil prices are expected to rise worldwide, including in the United States. Because OPEC fell approximately 3.6 million barrels per day short of its output target in August, OPEC’s production cutbacks are based on current baseline statistics, which implies the cuts would be less severe.
Beginning in March, the Biden administration announced that it would begin releasing oil from the Strategic Petroleum Reserve, an institution established in the 1970s in response to oil embargoes, to keep petrol prices low. This year’s release of 180 million barrels of oil from the United States petroleum reserves is slated to expire on October 31.
However, according to the White House statement on October 5, that idea appears to have been abandoned. According to the statement, national security advisor Jake Sullivan and National Economic Council Director Brian Deese indicated that, following Biden’s direction, the Department of Energy would send additional 10 million barrels to the market next month from the Strategic Petroleum Reserve.
They declared The President would continue to order Strategic Petroleum Reserve releases as necessary to safeguard American consumers and advance energy security. He is instructing the Secretary of Energy to investigate any further responsible initiatives that may be taken to increase domestic production in the short term.
According to a White House statement, the government has attacked US oil and energy businesses again, accusing them of generating a “historically high difference between wholesale and retail gas prices.” As gasoline prices approached $5 earlier this year, Biden wrote to the CEOs of ExxonMobil, Chevron, BP, and other major oil companies, telling them that if they did not raise production, he would take unilateral action.
Their statement also stated that OPEC’s decision will have the greatest impact on low- and middle-income countries and that the action was made to safeguard member Russia and its leadership. Subail al-Mazroui, the UAE’s energy minister, told reporters ahead of the OPEC meeting in Vienna that the October 5 decision was based on technical reasons.
This is a technical choice, not a political one. We will not utilize OPEC as a political organization, stated al-Mazroui.
Underproduction occurred due to Western sanctions imposed on nations such as Russia, Venezuela, and Iran and output issues with producers like Nigeria and Angola. According to Saudi Energy Minister Abdulaziz bin Salman Al Saud, the actual reduction will range from 1.0 million to 1.1 million barrels per day.
Jefferies analysts expected 0.9 million barrels per day, while Goldman Sachs estimated 0.4 million to 0.6 million barrels per day, with cutbacks coming mostly from Gulf OPEC producers like Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait.
Due to skyrocketing inflation, Biden faces dismal approval ratings ahead of the midterm elections and has called on Saudi Arabia, a long-term US ally, to assist cut prices. Other US officials have stated that Washington favors lower oil prices to deprive Moscow of oil money.
When Biden visited Riyadh earlier this year, he could not gain solid cooperation promises on energy. Relations have deteriorated since Saudi Arabia has not criticized Moscow’s actions in Ukraine.
Russian Deputy Prime Minister Alexander Novak, placed on the United States Specially Designated Nationals list last week, came to Vienna to attend OPEC meetings.
In late September, the Strategic Petroleum Reserve fell to roughly 422.58 million barrels of oil, the lowest amount since 1984. This decreased from around 617 million barrels on October 1, 2021.
Honestly, this is the first time in history that the Strategic Petroleum Reserve has been used as a political credit card. With the intent to reduce the political risk for midterm elections, Tim Stewart, president of the United States Oil and Gas Association, told Just the News of the historic release of oil from the reserve.