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President Joe Biden tried to give a Thanksgiving gift to US drivers Tuesday, announcing the biggest announcement in the country. extracting stored oil in order to lower the price of petrol.
It was interesting for the leader who put it on global warming at the center of its legal system, and as a representative said the US should “change from oil companies”.
What was announced by it?
The US said it would produce 50m oil barrels from its 600m barrels. Ideas for the company Strategic Petroleum Reserve – an underground reservoir built after the oil crisis of the 1970s.
The UK, India, South Korea, Japan and China also agreed to release oil shares. Outputs in Britain are being prepared with up to 1.5m barrels. India produces 5m barrels. The number of others has not yet been determined: Energy Aspects, a consultant, said it expects more information from China to be released within a few days, to generate distance from US advertising.
The U.S. population affects about half a day of essential oil worldwide around 100m barrels per day. Approximately 32m barrels will be delivered between December and the end of April 2022 in exchange for oil companies, which should reimburse volume equivalent to 2024. Other 18m barrels support trade that Congress has already approved.
Why now?
Other attempts to reduce oil prices, incl requests that Saudi Arabia and a group of Opec + manufacturers pumped more oil, so far they have been confused. Supervisors began to showcase the possibility of using the repository at Financial Times meetings last month, as Jennifer Granholm, US secretary of state, said. was “considered”.
Announcing plans to release more oil before the COP26 climate summit this month would be politically motivated, experts say. Supervisors also need time to consult with their respective countries.
In it, rising prices has come out as a difficult domestic issue. Republicans have resigned, criticizing Biden’s climate statement on oil prices which is about 60 percent higher than last year.
“In view of the unprecedented economic crisis plague, the recovery crisis and the anxiety associated with rising prices, are understandable why management may adopt this approach, “said Jason Bordoff, co-founder of the Columbia Climate School.
Will it lower prices?
The oil market is expected to produce more goods than the US announced. Crude climbed in response Tuesday, with Brent’s global benchmark setting 3.3 percent at $ 82.31 a barrel.
“Threatening and talking about it seems like a good thing,” said Jamie Webster, director of the BCG Center for Energy Impact. “But as you can see from the trees. . . it does not produce the desired results. ”
Amrita Sen, research director of Energy Aspects, said the release was a “symbolic move” that would not have long-term consequences. The release could take up to six months, the oil needs to be replenished and most of them are “sour”, very black sulfur while the market is very tight in “sweets”, he said.
Traders will now look forward to the OPEC + summit on December 2. Saudi Arabia’s president group of manufacturers has been increasing sales by 400,000 b / d each month while reviving output that cut back last year. But now it could stop this, experts say.
OPEC did not respond to a request for comment. “Market trends will be highlighted at next week’s service meeting,” said one team expert.
What will geopolitics look like?
As of Tuesday’s announcement, the largest oil exports to the United States came in the 2011 civil war in Libya, when oil prices threatened to rise to $ 120 a barrel. The International Energy Agency co-sponsored the release and was assisted by Saudi Arabia.
The IEA has not participated in this and other European countries have refused to use emergency stocks for political reasons, according to a person who is well aware of their responsibilities. The White House turned to major Asian countries that ate its substitutes, confirming market changes since the developed countries formed the IEA after the 1973-74 oil crisis.
The release could also signal a new breakdown in US relations with Opec +. It was Donald Trump who persuaded Saudi Arabia and Russia, during the oil price crisis last year, to reduce production in order to raise prices and save the American shale patch from collapsing. Now the US is asking for something different.
The release of SPR may not be good in Riyadh. “The Saudis don’t look like they are being cornered,” said Helima Croft, chief of international operations at RBC Capital Markets.
He is “not preventing” the empire from reducing Opec + production – a move he said would prompt Democrats to revive the so-called. Nopec rules specific to the cartel character group.
What can the US do next?
The Federal Energy Information Administration said even Tuesday before announcing that oil and oil prices could fall next year.
If not, “the president has a lot of weapons he is looking for – and those weapons remain on the table,” Granholm said Tuesday.
Banning the export of crude oil, which began to be released during the Obama administration, is one long way, experts say. Reducing the proportion of biofuel in oil mixtures is another option.
Saying more about the relationship or market disruption with US oil producers makes sense. The Biden government has already sought to investigate the possibility expensive and encouraged companies to increase production.
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