WASHINGTON: The United States on Tuesday said it would engage strategically with China, India, South Korea, Japan and Britain to try to cool down prices after OPEC+ producers repeatedly ignored calls for more crude. Will release millions of barrels of oil from reserves.
US President Joe Biden, facing low approval ratings amid rising inflation ahead of next year’s congressional elections, repeatedly asked the Organization of the Petroleum Exporting Countries and its allies known as OPEC+ without a response. Asking to pump more oil.
Crude oil prices recently hit a seven-year high and although they are still below levels between 2011 and 2014, when they broke below $100 a barrel, many consumers see a dramatic increase from a year earlier. are feeling the pain.
The US announcement was for the release of 50 million barrels, the equivalent of about two and a half days of US demand. Meanwhile, India said it would release 5 million barrels, while Britain said it would allow the voluntary release of 1.5 million barrels of oil from privately held reserves.
Details of the amount and timing of oil release from South Korea, Japan and China were not announced. Seoul said it would make a decision after discussions with the United States and other allies. And Japanese media said Tokyo would expand its plans on Wednesday.
Officials said this is the first time the US has coordinated such a move with some of the world’s biggest oil consumers.
OPEC+, which includes Saudi Arabia and other US allies in the Gulf, as well as Russia, has turned down requests to pump more in its monthly meetings. It meets again on 2 December to discuss policy but has so far shown no sign that it will change policy.
The group is struggling to meet current targets under its agreement to gradually increase production by 400,000 barrels per day (bpd) every month – a pace Washington sees as too slow – and remains concerned that the coronavirus A resurgence of cases could once again drive down demand.
The recent high oil prices have been caused by a sharp jump in global demand, which peaked at the start of the pandemic in 2021, and analysts have said that the issuance of reserves may not be enough to stifle further growth.
“This is not enough to bring prices down in a meaningful way and could backfire if it prompts OPEC+ to slow production growth,” said Carolyn Bain, chief commodities economist at Capital Economics Ltd. “
Benchmark Brent crude was trading above $80 a barrel on Tuesday, well above levels pre-announced, but still below a three-year high of more than $86 from last month.
US officials said the release from the US Strategic Petroleum Reserve would be a combination of debt and sales to companies. The 32 million barrel loan will be due over the next several months, while the administration will accelerate sales of the 18 million barrels already approved by Congress to raise money for the budget.
“We will continue to talk to international partners on this issue. The president is ready to take additional action if needed, and to his full-fledged officials working in coordination with the rest of the world,” a senior US administration official told reporters. are ready to use.
An OPEC Plus source and several market analysts said the release was not as big as the headline data suggests.
Published in Dawn, November 24, 2021