What does the United States (and beyond) want to do about oil
The United States wants to tap into its strategic reserve and put barrels of oil on the market to bring prices down. They are not alone: China, India, Japan and South Korea could unite. OPEC is not happy. All the details
According to reports from various agencies, such as Reuters and Bloomberg , today the United States will announce the release of certain quantities of oil from the national strategic reserve. The move is aimed at lowering the prices of crude oil – they are above $ 79 per barrel – by increasing the supply available on the market.
BIDEN AGAINST OPEC +
The administration of Joe Biden, therefore, will go against the policies of OPEC +, the group that brings together many of the major exporters of the fuel in question and that "controls" the oil market. The organization has been limiting production for a long time now, and has so far rejected requests for higher output, mainly from the United States: Washington is concerned that high oil prices – now lower, but exceeded $ 81 per barrel – could damage the economic recovery and aggravate the picture of high inflation.
AN UNUSUAL MOVE
Biden's is an unusual move. In fact, sales of oil from the US strategic reserve have only been authorized three times: in 1991, during the Gulf War; in 2005, following the impact of Hurricane Katrina; in 2011, during the crisis in Libya.
THE AMERICAN COALITION
It seems that the United States will not be alone in drawing on its strategic oil reserve. Other major oil-consuming countries such as Japan , India and South Korea will do so – and it would be an unprecedented move. The Biden administration has also invited China to participate in the action: Beijing has made it known that it is working on the release of barrels.
In the past, oil releases from national stocks – for example in 2011: 60 million barrels – have been coordinated by the International Energy Agency, an international and intergovernmental body. This time, however, it is a pact between "private individuals".
QUANTITIES
While there are no certainties, Bloomberg writes that the United States could release more than 35 million barrels of oil over time. Considering also the volumes of the other participants, OPEC + will probably have to revise its plans.
It is possible that the move could lead to a "conflict" for control of the oil market and create new tensions between America and Saudi Arabia, which leads OPEC + together with Russia, as well as being the main US ally in Middle East.
WHAT OPEC + WILL DO
OPEC + is carrying out the program of increasing the monthly supply to 400 thousand barrels per day, as established a while ago. The organization will meet on 2 December to approve the continuation of this line also for January 2022.
However, the group's officials have already warned that they could respond to the American-led initiative, arguing that the release of millions of barrels from inventories is not justified by market conditions, also given the new restrictions imposed in Europe with the increase in infections. from coronavirus.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/stati-uniti-riserva-strategica-petrolio/ on Tue, 23 Nov 2021 09:37:49 +0000.