Biden to release 15 million barrels from US oil reserves from Strategic Petroleum Reserve

US president will announce plans to combat high prices in winter

A complex where the US Department of Energy stores some of its Strategic Petroleum Reserve, in Perth Amboy, New Jersey. EPA
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US President Joe Biden will announce on Wednesday that he is putting the final 15 million barrels from a record release of strategic oil reserves on the market in December, with more releases possible if energy prices surge, the White House said on Tuesday

The oil from the Strategic Petroleum Reserve will be "completing the 180 million barrel release authorised in the spring", in response to price rises linked to Russia's invasion of Ukraine, a senior US official said.

The order means the president will be "making clear that the administration is prepared to undertake significant additional … sales this winter if they are needed due to Russian or other actions disrupting global markets", the official said.

The decision to make the biggest ever dip into the emergency oil reserves, which are usually kept for responding to situations such as hurricane-related shutdowns at oil refineries, was Mr Biden's gambit to calm energy markets and protect the world's biggest economy from Ukraine war shocks.

Major energy exporter Russia was hit with US and European sanctions soon after it invaded Ukraine in February, causing turmoil on markets.

And the Kremlin has threatened to use its influence in energy supplies as an economic weapon against the West, which supports Ukraine's fight to repel Moscow's invasion.

For Mr Biden, there are serious domestic concerns, with petrol prices at one point averaging more than $5 a gallon, causing nationwide anger.

While prices have since moderated, inflation remains the biggest factor driving Republican hopes of defeating the Democrats in November's midterm legislative elections.

Mr Biden is also highlighting plans to refill the reserve as soon as prices hit levels of about $67 to $72 a barrel.

This is "an important signal for producers that the SPR will be part of helping to moderate and stabilise price flows, not only when prices are going high but when prices are going low", the official said.

The reserve, meanwhile, remains in good shape, the official said, with more than 400 million barrels.

"That is still a large amount" and allows for "additional opportunity … if we need to do more sales".

The official described the SPR use as a "brilliant" bridge out of a crisis moment, playing "an incredibly constructive role through a very challenging time period".

But with "additional volatility" expected from Russia and production levels still not back to pre-Covid pandemic levels, stability is "not quite there yet".

Asked whether the US could take the more radical measure of curbing fuel exports, which would help to hold down domestic prices but hurt foreign buyers including allied countries, an official declined to comment, apart from saying: "We're keeping all tools on the table."

AFP contributed reporting

Updated: October 19, 2022, 8:22 AM
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