The United States is prepared to release oil from Strategic oil reserves because the Russia-Ukraine crisis helped push prices up.
Russia is the number 3 oil producer, after the United States and Saudi Arabia, and it supplies about 10% of the world’s needs. A small portion of that went to the United States, but escalating tensions between Russia and the West helped fuel a global price increase, already the highest since 2014.
Jen Psaki, the White House press secretary, said Wednesday that releasing the stockpile is “certainly an option on the table.”
America’s emergency stockpile, containing about 580 million barrels of oil, has been tapped recently: President Biden ordered the release of 50 million barrels in November as he sought to lower the price of gas that has contributed to high inflation and spurred OPEC Plus, a group of oil producers that includes the Organization of the Petroleum Exporting Countries, Russia and others, to pump more oil. The United States consumes about 20 million barrels of oil per day.
That release had very little impact, if any. The price of oil, which was around $76 prior to the announcement, actually rallied afterward – analysts were expecting a larger release. Prices have finally fallen after the announcement of the highly contagious Omicron variant of the coronavirus, stoking fears of another slowdown in travel.
But the price of a barrel of US crude has skyrocketed. Brent crude, the global benchmark, hit nearly $100 a barrel on Tuesday, and West Texas Intermediate crude, the US benchmark, hit $95 a barrel. Both have since dropped in price a bit. Prices at the pump have also increased.
The pain from any disruption could be the most severe in Europe. Russia supplies a large portion of the region’s natural gas, which has skyrocketed in price over the past year. Stockpils in the region are running low and relief is unlikely to come anytime soon – Germany said on Tuesday it had halted regulatory progress on the Nord Stream 2, a new natural gas pipeline connecting the country with Russia, part of a series of coordinated sanctions after Russian President Vladimir V. Putin ordered troops to be sent into Ukraine’s breakaway regions . There is also concern that Mr. Putin could cut or limit supply in retaliation.
So far, the sanctions did not directly target the Russian energy sector and has not had any direct impact on supply. And prices have been stabilized by last week’s reports on negotiations to restore the nuclear agreement between the US and Irana development that could allow tens of millions of barrels of oil to be brought to market.
https://www.nytimes.com/2022/02/23/business/strategic-petroleum-reserve-spr.html White House considers releasing more oil from strategic reserve