The United States said on Tuesday it would release 50 million barrels of oil from strategic reserves in a coordinated move with China, India, South Korea, Japan and Britain to cool prices after OPEC+ producers rebuffed calls for more crude.
The White House issued the statement after a source in the US administration said Washington had been hashing out a plan with major Asian energy consumers to drive down prices from near three-year highs. Britain had not previously been mentioned.
US President Joe Biden, facing low approval ratings amid rising inflation ahead of next year’s congressional elections, has repeatedly called on the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to pump more oil.
But the group has rebuffed the requests, as members have already been struggling to meet its existing targets for production increases and amid fears a resurgence of coronavirus cases could once again drive down demand.
The release from the US Strategic Petroleum Reserve would be in the form of a loan sale to companies, which must return the crude at a later date, and was the first time the United States had coordinated a release with some of the world’s largest oil consumers, US officials said.
OPEC+ states, including US allies in the Gulf, meet again on Dec. 2 to discuss policy but have shown no sign of any change in tack to heed US calls.
The unprecedented effort by Washington to team up with major Asian economies to lower energy prices sends a warning to OPEC and other big producers that they need to address concerns about high crude prices, up more than 50% so far this year.
An OPEC+ source, speaking before the group’s December meeting, said a release from reserves would complicate the maths for OPEC+, as it monitors the market on a monthly basis.
Suhail Al-Mazrouei, energy minister of the United Arab Emirates, one of OPEC’s biggest producers, said earlier Tuesday he saw “no logic” in increasing UAE supply to global markets.