Ari Natter and Saleha Mohsin, bloomberg News

WASHINGTON
EnergiesNet.com 02 24 2022

The Biden administration is considering tapping its emergency supply of oil again in coordination with allies to counter a surge in prices brought on by Russia’s moves against Ukraine, according to two people familiar with the matter.

While no decision has been made, “robust conversations” within the administration are underway, including on potential price point triggers and how to coordinate a release from the reserve with other nations, said the people, who asked not to be identified discussing non-public government deliberations. Modeling is being done to ascertain size and scope of any potential release, they said.

When asked if the US considering another release of the SPR to stem rising gas prices given the Ukraine crisis, White House Press Secretary Jen Psaki said “that is certainly an option on the table.”

“What we’re trying to do and focus on is take every step we can working around the world with our counterparts and partners to minimize the impact on the global energy market,” Psaki said.

Oil slipped after market hours after Bloomberg News reported that the U.S. is considering a potential release from its oil reserves in coordination with allies. West Texas Intermediate futures fell close to $1 after settling at $92.10. Brent fell 72 cents or 0.8% after settling unchanged. The commodity continues trading at seven-year highs, despite daily fluctuations.

The deliberations follow a White House move in November to authorize the release of 50 million barrels of crude from the reserve in an effort coordinated with India, Japan, South Korea and China to counter soaring prices as economies recovered from the pandemic.

Earlier: Biden Pledges to Keep Pressing for Lower Oil Prices Amid Rise

The White House has credited that action with reducing the price of gasoline around 10 cents a gallon during the holiday driving season. But it remains under pressure to keep costs in check as fuel and consumer prices rise, potentially imperiling Democrats’ hold on the House and Senate. Analysts have said gasoline prices could top $4 a gallon amid the Russia-Ukraine conflict. The average daily price for a gallon of regular unleaded gasoline was $3.54 Wednesday, according to automobile club AAA.

As geopolitical tensions rise, a chorus of Wall Street banks and oil executives are forecasting a return to $100 oil. On Wednesday, JPMorgan Chase & Co. said Brent is likely to average $110 per barrel in the second quarter, assuming Russian escalation is coupled with an Iranian deal.

Americans are experiencing the highest inflation since the early 1980s, which is well outpacing wage growth. The Russia-Ukraine conflict may further take a toll on confidence, especially if gasoline prices continue to rise, and surging mortgage rates are making housing that much less affordable.

Russia is the largest exporter of natural gas, accounting for 17% of the global share, and and accounts for 12% of the world’s crude exports, on par with Saudi Arabia.

Biden, speaking from the White House on Tuesday, said the administration is “closely monitoring” energy supplies and is preparing to coordinate with big oil producers to secure supply and “blunt” gas prices.

“I want to limit the pain the American people are feeling at the gas pump,” he said.

bloomberg.com 02 23 2022