Strategic oil reserves deployed at high fuel price

Fuel prices are skyrocketing, partly because of the high oil price, which is pushing some superpowers to use up stored American oil reserves. The United States is releasing 50 million barrels of oil from its strategic reserves to combat high fuel prices at the pump. That was announced by the White House. India, Japan, China, South Korea and the United Kingdom are also participating in the coordinated step.

The oil comes from the US Strategic Petroleum Reserve (SPR), which is good for more than 600 million barrels. In addition, oil companies can receive crude oil from the reserves which they then later have to return to the government, plus interest. This is called an SPR swap. A similar arrangement was also made after Hurricane Ida, which severely hit the oil industry in the south of the US, threatening fuel shortages. Now 32 million barrels are borrowed. In addition, oil from the stocks can be sold directly to oil companies for refining.

This is now an accelerated sale of 18 million barrels previously approved by Congress. The White House said President Joe Biden could do even more if necessary to deal with the expensive fuel. The strategic supplies are stored underground in the states of Texas and Louisiana. Biden has criticized the OPEC+ oil alliance for doing too little to counteract high oil prices. He believes that oil cartel OPEC and its allies such as Russia should pump even more oil. High fuel prices are at the expense of Biden’s popularity.

The OPEC countries promise to meet to discuss their oil production. They say that the strategic reserves are for emergencies only and deny that they are now. For the time being, it seems that OPEC+ is not increasing production any more. It is currently being increased by 400,000 barrels per day every month.