As the White House tries to lower fuel prices, the Biden administration considers releasing up to 180 million barrels of oil over several months from the Strategic Petroleum Reserve (SPR), Reuters reported citing four U.S. sources.
According to the U.S. Energy Department, the U.S. SPR currently holds 568.3 million barrels, its lowest since May 2002. The 180 million barrels is equivalent to about two days of global demand, marking the third time the U.S. has tapped its strategic reserves in the past six months.
If done, it would be the largest release in the nearly 50-year history of the SPR. The news slammed oil markets, pushing prices down more than $6 a barrel.
The International Energy Agency (IEA) member countries will meet on Friday to decide on a collective oil release, a spokesperson for New Zealand's energy minister said.
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The IEA has said that sanctions and reluctance to purchase Russian oil could remove about 3 million barrels per day (BPD) of Russian oil from the market starting in April. Russia exports 4 to 5 million BPD.
Supply concerns drove benchmark Brent crude futures to about $139 a barrel this month, the highest since 2008.
The oil release would increase supplies by 1 million barrels per day for six months and help the market rebalance this year, but Goldman Sachs analysts said it does not resolve the structural supply deficit.
IEA member states agreed earlier in March to release over 60 million barrels of oil reserves, with 30 million barrels coming from the U.S. SPR. The Biden administration is also considering temporarily removing curbs on summer sales of higher-ethanol gasoline blends to lower fuel costs.
