The Biden administration is considering releasing crude oil from the US Strategic Petroleum Reserve (SPR) to cool down rising motor fuel prices. Washington also reportedly asked China, India, Japan, and South Korea to tap their oil reserves in a coordinated effort to ease energy prices. The move comes as Biden faced growing political pressure over rising inflation. The coordinated effort with other big oil consumers will also allow the US to counterbalance the resistance from OPEC+ to raise supply faster.
However, analysts said releasing crude oil prices would unlikely have a long-term effect on curbing oil prices because it did not boost production. They also noted that some of the released barrels left US shores to overseas markets. The country tapped 12 million barrels of SPR oil in the last two months, including 3.1 million barrels in the last week of October. An industry survey showed 1.6 million barrels of SPR crude were exported last month.
The US SPR was established in 1975 after the Arab oil embargo boosted gasoline prices and hurt the US economy. It is designed to shield the US from future disruptions or in events of crisis such as war and natural disasters. About 606 million barrels of oil are currently sitting in dozens of heavily-guarded caverns on the Louisiana and Texas coasts. That could meet US oil consumption for over a month. The facilities can ship as much as 4.4 million bpd to refineries in the regions. The US Energy Information Administration said SPR oil could enter the market 13 days after a presidential decision.
