By Ambar Warrick
Investing.com-- U.S. President Joe Biden on Tuesday confirmed plans to release 15 million barrels of oil from the Strategic Petroleum Reserve (SPR), and said that the government plans to begin refilling the reserve only when crude prices fall significantly from current levels.
To this end, the President is ready to authorize more sales from the SPR in the coming months if necessary. The White House confirmed in a statement that it will sell 15 million barrels of oil from the SPR this week, with delivery to happen in December.
“The Administration will not hesitate to use this tool, or the others at its disposal, to shore up the global supply of energy, support domestic inventory levels, and bring prices down for Americans,” the White House said.
Tuesday’s release is the last tranche in the planned 180 million barrel drawdown from the SPR, which was initiated earlier this year to help bring down oil prices after Russia’s invasion of Ukraine.
But this has put Biden at odds with Saudi Arabia, the leader of the Organization of Petroleum Exporting Countries and its allies (OPEC+). The cartel recently announced a supply cut of 2 million barrels per day to drive up oil prices, which were trading near annual lows.
Biden had threatened more releases from the SPR in relation to the cut. Today’s release will translate to roughly 500,000 barrels per day of supply when delivery occurs in December.
A series of drawdowns this year have bought the SPR to its lowest level in about 38 years. But it still remains the largest crude reserve in the world, at about 400 million barrels.
The White House said it intends to replenish the reserve by buying oil only when prices are at or below about $67 to $72 a barrel. Brent oil futures were around $91 a barrel on Tuesday, while West Texas Intermediate futures traded around $83 a barrel. Reports of the planned 15 million release caused a 1% decline in prices this week.
Additionally, the U.S. President also called on energy firms to pass on lower crude costs to customers “right away.”
U.S. gasoline prices surged to record highs earlier this year and are one of the biggest contributors to elevated inflation in the country. The spike had dented the popularity of the 46th President, even as prices eventually retreated from record highs.
Gasoline prices are major sticking point in the upcoming midterm elections in November, with Republicans using the spike in prices as a major criticism of the Democrats.