The United States considers releasing emergency oil reserves

U.S. Energy Secretary Jennifer Granholm raised the possibility of releasing crude oil the government's strategic petroleum Reserve, while ruling out a ban on crude exports, at an Energy Transition Strategy summit Wednesday, the Financial Times reported. She said "all tools are on the table" as the Biden administration faces the political risk of soaring gasoline prices.

The average price at the pump is hovering at a seven-year high of $3.19 a gallon. The White House is concerned that higher fuel costs could hurt its political prospects ahead of next year's midterm elections.

The Strategic Petroleum Reserve, located near the Gulf of Mexico, is the world's largest emergency reserve of crude oil. The reserve, which is managed by the U.S. Department of Energy, held 617.8 million barrels of oil last week, about a month's supply of U.S. petroleum products.

The last time the US released crude on a large scale was in 2011, when the Obama administration worked with other members of the International Energy Agency to use emergency stockpiles to bring down soaring oil prices. But U.S. crude oil exports have been unrestricted since Congress lifted federal restrictions in 2015.

Crude oil, which fell more than 2% in intraday trading on Wednesday on the news a rise in U.S. crude inventories, fell further, falling below $77 at one point, down nearly 2.7% Tuesday's close, while cloth fell to $80.58, down nearly 2.4% Tuesday's close.

Goldman sachs says a US strategic petroleum reserve release could put $3 / BBL of downside risk on its year-end Brent forecast of $90 / BBL. However, with the global oil market facing structural deficits 2023, this risk is only temporary. The US is also considering proposals to ban crude oil exports to support its domestic retail fuel market, but such a move could backfire. The export ban would be positive for Brent, which is linked to the price of U.S. retail fuel.

The Biden administration is clearly growing increasingly concerned about the global energy crisis rising oil prices as it presses OPEC+ to increase oil production in vain. Oil prices surged as much as 3.3 per cent to $78.38 a barrel in New York on Monday after OPEC+ stuck to a modest increase of 400,000 b/d in November.

Mr Granholm said the US was disappointed "everyone was hoping that there would be additional supply so that prices would be pushed up". She also said the US was doing "everything in its power" to address tight gas supplies, including investigating allegations of Russian "market manipulation".

The U.S. government has been in contact with OPEC producers for months as rising gasoline prices threaten the U.S. economic recovery. A White House official, speaking on condition of anonymity, said senior U.S. officials had expressed their desire to increase production to several members of the OPEC+ group ahead of Monday's meeting. The senior officials reiterated national Security Adviser Jack Sullivan's statement in August urging OPEC+ to do more to support the global economic recovery.

White House press secretary JenPsaki said on Monday: "while we are a member of OPEC, we will continue to use all the tools at our disposal to make sure that we can keep gas prices down for the American public. We are in daily contact with OPEC."

Bob McNally, head of Rapidan Energy Group a former adviser to the Bush administration, said: "The release of strategic reserves was on the agenda within a nanosecond after Sullivan was rejected in Riyadh the government realised shale producers could increase production fast enough."

On Wednesday, Psaki said the White House was continuing to monitor the oil market situation would do as much as necessary to address oil prices. She declined to comment on the strategic petroleum reserve release "comments by the US energy secretary that a ban on US crude oil exports could be a means to calm prices".

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Source: China Energy Net