February 9, 2023

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The White House plans to announce additional sales of oil reserves in the wake of the OPEC + cut

The White House plans to announce additional sales of oil reserves in the wake of the OPEC + cut



CNN

President Joe Biden will announce on Wednesday the sale of an additional 15 million barrels of strategic petroleum reserve in December, a senior administration official said, as his administration seeks to counter market pressures brought on by the OPEC+ decision to cut oil production targets. Only three weeks into the midterm elections.

Announcing the sale is the latest move in the White House An unprecedented plan to achieve balance in global markets and discourage high gas prices. It is an extension of a six-month program that was designed to provide a bridge for domestic producers to ramp up their production as the global market faced contractions in the wake of Russia’s invasion of Ukraine, even as the release consisted of dedicated barrels in its March announcement.

This measure, which has been in regular sales for the past several months, combined with global economic concerns to help Reduce gas prices For nearly three consecutive months.

“The price of gas is still very high, and we need to keep working to bring it down,” Biden said at a party in Los Angeles last week, adding that he intends to announce additional measures in the coming days.

Planned action would satisfy management Advertising in March to release a historic 180 million barrels of strategic petroleum reserve over six months to counteract the high energy prices caused by the Russian invasion of Ukraine. The measure, which has been rolled out in regular sales for the past several months, combined with global economic concerns to help push gas prices down for nearly three months in a row.

Biden also made it clear to his advisors that if conditions warranted, he would be willing to allow future releases to balance the market. The official said the president has directed his energy and economic teams to prepare to authorize “significant additional sales in the coming months” if global market conditions warrant it.

On Wednesday, the president will also detail the administration’s plan to refill the emergency reserve, which is now at its lowest level in nearly 40 years, marking an important milestone for market participants, given the amount of federal action over the past six months.

Biden will announce that the administration intends to buy back crude oil for emergency reserves when prices are at or below between $67 and $72 a barrel.

“We believe this is an important signal to producers that the SPR will be part of helping to moderate and stabilize price flows – not just when prices are high but when prices are low,” the official said.

As part of this, the administration will also finalize a rule to allow the US government to enter into fixed-price contracts with suppliers through a competitive bidding process, which will facilitate future buybacks of crude oil.

The plan also serves the purpose of countering any criticism about the unprecedented volume of Biden’s reserve issuance, which officials said underscores the administration’s intention to refill when market conditions make it more beneficial.

“This administration is very committed – and we will repeat that commitment – to renewing the Strategic Petroleum Reserve,” the official said. “We see the Strategic Petroleum Reserve as an incredibly important national security asset and we want to make sure that it serves its purpose well in the future.”

The official pointed out that the reserve, Which has nearly 400 million barrelsis still the largest in the world and the United States is still in a position to deal with any crisis or challenges that may require its use.

“It is important to understand and stress that 400 million barrels is a lot of barrels,” the official said.

US officials have strategically slowed sales volumes as the six-month program approaches its deadline in an effort to ease the market transition until the OPEC+ decision, Which provoked an angry response from US officials An intense effort within the administration to find options to counter any resulting increase in gas prices.

This included additional releases from the reserve, and officials closely monitored Biden’s ability to release new releases within the confines of the initial program as Election Day approached.

This title and story were updated with additional developments on Tuesday.

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