Joe Biden set to announce biggest ever release of US oil reserves

US president Joe Biden is set to announce the largest-ever release of oil from the country’s emergency stocks as he steps up efforts to cool crude prices that are feeding in to high inflation across the economy, three people familiar with the plan said.

The White House in expected on Thursday to announce the release of 180mn barrels from the Strategic Petroleum Reserve, dwarfing the size of previous emergency releases, and is also seeking co-operation from other western countries to release some of their stored oil.

People familiar with the plan said the latest release, Biden’s third such move since November, would last several months and amount to as much as 1mn barrels of oil a day.

The US consumes about 20mn barrels a day, representing about a fifth of global demand.

The US government will later buy back the oil to replenish the reserve at a price of $80 a barrel, according to a person briefed on the plan, in a move designed to encourage more drilling from American shale companies.

The government is trying to bridge a supply dearth until US production begins to rise later this year, according to a person familiar with the plan.

Oil prices fell on reports of Biden’s impending announcement, with West Texas Intermediate, the US oil marker, down 4.2 per cent to $103.29 and international benchmark Brent crude off 4.4 per cent to $108.50.

Biden is due to speak on Thursday at 1.30pm about “his administration’s actions to reduce the impact of [Vladimir] Putin’s price hike on energy prices and lower gas prices at the pump for American families”, according to the White House schedule.

Since Moscow’s invasion of Ukraine, Biden has increasingly blamed Russia’s president for high inflation, which is hurting his approval ratings and damaging the Democratic party’s chances of retaining control of Congress in the midterm elections in November.

The White House move also comes as western countries have stepped up sanctions against Russia, the world’s largest petroleum exporter, including a ban by the US on oil imports from the country in the wake of Moscow’s war in Ukraine.

The International Energy Agency, a watchdog for western consumer countries, said this month that sanctions on Russia and shippers’ reluctance to load Russian crude could cut the country’s output by up to 3mn barrels a day, or about 3 per cent of the world’s total, by April.

“It would not be surprising for the administration to extend the [earlier stock releases] given the large Russian oil supply disruption risk is not going away,” said Bob McNally, an adviser to former US president George W Bush who now heads consultancy Rapidan Energy Group.

Oil prices have surged since the invasion, with international benchmark Brent hitting 14-year highs this month. Prices have almost doubled in the past year, while average petrol prices are up almost 50 per cent and hit records in recent weeks.

The US has also urged Saudi Arabia and other members of Opec to increase the pace of supply increases, but the cartel has resisted pressure to do so.

The oil producer group and allied countries on Thursday said they would aim to increase output by 432,000 b/d in May, continuing with a monthly plan agreed last year to only gradually replace volumes cut at the start of the pandemic. 

“Current volatility is not caused by fundamentals, but by ongoing geopolitical developments,” Opec said.

The SPR is a government-maintained emergency storage complex consisting of four underground sites in salt domes along the US Gulf Coast. It holds 568mn barrels of crude oil at present, according to the federal Energy Information Administration.

Biden announced a release from the SPR in November, and last month the US joined other members of the IEA in a co-ordinated global release.

Previous large stock releases have occurred after supply disruptions such as Hurricane Katrina in 2005 and the Libyan civil war in 2011.

The Department of Energy declined to comment.

Additional reporting by Myles McCormick in New York and Tom Wilson in London