Biden will put on the market another 15 million barrels of oil from the strategic reserve

President Joe Biden announced that the last 15 million barrels of the state’s strategic oil reserves will be put on the market. Similar steps cannot be ruled out in the future in the event of a sharp rise in energy prices.

The new tranche of oil from the strategic reserve will be allocated within the 180 barrels that the president authorized to be released in the spring due to the price spike caused by the Russian invasion of Ukraine.

The president “will make clear that the administration is prepared to make significant additional oil sales this winter if needed because of Russian actions or other actions that disrupt world markets.”

Biden’s decision to implement the largest reduction in oil stocks stored for emergencies in U.S. history, such as refinery shutdowns due to hurricanes, was an attempt to calm the global oil market and protect the American economy from shocks related to the war in Ukraine.

Russia, one of the world’s biggest oil suppliers, came under U.S. and European sanctions shortly after it invaded Ukraine in February, causing turmoil in global markets. In addition, the Kremlin threatened to use its leverage over energy supplies as an economic weapon against the West supporting Ukraine’s fight with Russia.

Biden was also guided by the domestic situation: gasoline prices in the U.S. at one point exceeded $5 a gallon, causing widespread discontent. Although prices have since fallen, inflation remains a major factor fueling Republican hopes of defeating Democrats in November’s midterm legislative elections.

In announcing a 15 million-barrel reduction in inventories for delivery in December and pointing to the possibility of replenishing those reserves, Biden emphasizes the plan to replenish the reserve once prices reach $67-72 a barrel.

This is an important signal to producers that the strategic reserve will be used to help contain and stabilize price flows not only when prices are rising, but also when they are falling.

The stockpile remains in good shape at more than 400 million barrels. This is still a large volume that it gives the administration an additional opportunity to increase sales.

Using the reserve as a “brilliant” way out of a moment of crisis. It played “an incredibly constructive role in a very difficult time.

However, with “additional volatility” expected in Russia, and production levels still not back to pre-pandemic COVID-19 levels, stability is “not quite there yet.”