U.S. Discussing Joint Reserves Release with China, Others in Aim at OPEC

The United States has the largest strategic reserve at more than 600 million barrels.

OILMONSTER.COM- Governments from some of the world's biggest economies said on Thursday they were looking into releasing oil from their strategic reserves, following a rare request from the United States for a coordinated move to cool global energy prices and ahead of a meeting of major oil producing countries.

The Biden administration has asked a wide range of countries, including China for the first time, to consider releasing stocks of crude, the White House said on Thursday. Other major consumers India, Japan and South Korea were also involved in discussions, several people familiar with the requests told Reuters on Wednesday.

As the world economy rebounds from the pandemic, Washington is frustrated that producers in OPEC+, the Organization of the Petroleum Exporting Countries and allies such as Russia, have rebuffed U.S. requests to speed up oil supplies.

With gasoline prices and other costs rising, Democratic U.S. President Joe Biden also faces political pressure ahead of midterm congressional elections next year. A Reuters poll in October showed 67% of U.S. adults agreed that inflation is a very big concern.

Members of Biden's national security team had discussed the need to meet fuel demand, White House spokesperson Jen Psaki said on Thursday.

'That is an ongoing conversation and one we are having with a number of partners,' Psaki added. 

OPEC+ plans to meet on Dec. 2. The group has taken a slower approach to boosting output, viewing the economic recovery as too fragile to justify more supply.

Oil prices sank about 4% to a six-week low after Reuters reports about the U.S. request and China's decision to release some crude, before recovering some ground on Thursday. Oil prices have retreated from recent highs in anticipation that world supply will rise.

China's state reserve bureau told Reuters it was working on a release of crude oil reserves, but declined to comment on the U.S. request.

The United States has the largest strategic reserve at more than 600 million barrels. The U.S. SPR was set up in the 1970s after the Arab Oil Embargo to ensure the nation had adequate supply to weather an emergency.

In the last several years, the shale boom has pushed U.S. output to rival that of Saudi Arabia and Russia. That has enabled the United States to become less dependent on energy imports from other nations, particularly members of OPEC.

 Courtesy: www.reuters.com