WTI and Brent prices fell sharply at the beginning of the session on news that the US was considering releasing oil storage to solve inflation and supply shortage problems.
Prices fell sharply at the beginning of the session on signals that US President Joe Biden’s administration is considering releasing oil reserves to address inflation and supply shortage problems in the country due to the conflict in Ukraine. Bloomberg quoted sources close to the US as saying that the US is considering releasing about 1 million barrels of oil a day for several months.
Gasoline prices in the US are at a record level, which may curb consumption. Gasoline demand here has fallen for the third week in a row, despite being in the peak season for consumption, according to the US Energy Information Administration (EIA).
The news comes ahead of this week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, as well as after Saudi Arabia’s call to the United States to trust its market management policy.
The source said the US could sell up to 180 million barrels of oil from its reserves, cooling down the market that is tight in supply. The opening of Russia’s military campaign in Ukraine has caused inflation to soar and commodity markets to fluctuate wildly. Brent is heading for the most volatile month in history.
The US plan is also accompanied by a diplomatic effort to urge the International Energy Agency (IEA) to regulate global oil supplies from other countries. The source said that a final decision has not yet been made. However, the White House could announce this as early as today.
Before the conflict, the US tried to regulate global supply, but failed. This week, OPEC+ urged the US to trust its strategy, after the group faced numerous urges to increase production.
OPEC+ is forecast to increase production by only 432,000 barrels per day in May. The last time they met on supply policy, they met for just 13 minutes.