-f826be5f-600c-4f3c-822a-314aa0cfa5dd.jpeg)
Texas, Nov. 23 (BNA): The United States is expected to announce on Tuesday a loan of crude oil from its emergency stockpile as part of a plan it struck with major Asian energy consumers to lower energy prices, a source in the Biden administration said. With the situation he said.
The move is aimed at curbing rising energy prices after the Organization of the Petroleum Exporting Countries and its allies rejected repeated requests from Washington and other consuming countries to pump oil more quickly to keep up with rising demand.
US President Joe Biden is facing low acceptance rates due to rising prices of gasoline and other consumables in recovering from the coronavirus pandemic, posing a threat to him and his Democratic Party ahead of next year’s congressional elections, according to Reuters.
The source said that the so-called “swap” from the US Strategic Petroleum Reserve will be announced on Tuesday in a move coordinated with several countries. The source did not specify the amount of oil that will be released from the stocks.
Biden has already asked China, India, South Korea and Japan to release strategic oil stocks in coordination with the United States. Reuters reported that Japanese and Indian officials are working on ways to do so.
Washington’s unprecedented effort to cooperate with major Asian economies to lower energy prices aims to warn major producers that they must pump more oil to address fears of rising fuel prices in powerful economies.
OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, plans to meet on December 2 to discuss production policy.
The impact of a coordinated release of oil will depend on the time frame and quantity, but the market will view a release of more than 60 million barrels in about 30 days as “too negative for pricing,” CBA analyst Vivek said. ther.
“This situation comes at a time when this market is undergoing a shift and global oil stocks are increasing. So this could lead to prices dropping more sharply than you think,” he said, referring to new lockdowns due to the coronavirus in Europe.
The United States has historically worked with the Paris-based International Energy Agency (IEA), a bloc of 30 industrial energy-consuming nations when global supply problems demanded a coordinated release of stocks.
Japan and South Korea are members of the International Energy Agency, while China and India are only associate members.
Under a strategic petroleum reserve swap, oil companies take crude oil from inventories but are required to return it – or the refined product – plus interest. Trade-offs are usually offered when oil companies face a supply disruption such as a pipeline outage or damage from a hurricane.
US presidents have allowed emergency sales from the strategic reserve three times, most recently in 2011 during the war in OPEC member Libya. Sales also occurred during the Gulf War in 1991 and after Hurricane Katrina in 2005.
The current high prices were not caused by supply disruptions, but rather the recovery in global energy demand from the lows that occurred during the lockdowns in the early days of the coronavirus crisis.
OPEC+ is adding about 400,000 barrels per day to the market on a monthly basis to meet rising demand, but has resisted Biden’s calls for more rapid increases, arguing that the demand recovery may be fragile.
The threat of a coordinated release of oil stocks into the market, along with new coronavirus-related shutdowns in Europe, has taken the wind off crude’s recent rally. Brent crude was last traded at $79.30 a barrel, down more than $7 from its peak in late October.
Citigroup analysts estimated that the joint release of oil from the United States and other countries could be “in the range of 100-120 million barrels or more.”
However, one source familiar with the discussions said, inputs from China and other countries are still very high, and countries such as India and South Korea are likely to contribute a small amount of barrels.
HF