Governments from some of the world’s biggest economies say they are looking into releasing oil from their strategic reserves following a rare request from the United States for a co-ordinated move to cool global energy prices and before a meeting of major oil producing countries.
The Biden administration has asked big oil buyers such as India and Japan – as well as China for the first time – to consider releasing stocks of crude, several people familiar with the requests told Reuters on Wednesday. Oil prices fell on the news.
As the world economy rebounds from the pandemic, Washington is frustrated that producers in OPEC+, the Organisation of the Petroleum Exporting Countries and allies such as Russia have rebuffed US requests to speed up oil supplies.
With petrol prices and other costs rising, US President Joe Biden also faces political pressure before midterm elections next year.
Members of Biden’s national security team had discussed the need to meet fuel demand, White House spokesperson Jen Psaki said on Thursday.
“That is an ongoing conversation and one we are having with a number of partners,” she said.
OPEC+ plans to meet on December 2. The group has taken a slower approach to boosting output, viewing the economic recovery as too fragile to justify more supply.
Oil prices sank about four per cent to a six-week low after Reuters reports about the US request and China’s decision to release some crude before recovering some ground on Thursday.
China’s state reserve bureau told Reuters it was working on a release of crude oil reserves, but declined to comment on the US request.
The United States has the largest strategic reserve at more than 600 million barrels.
In the past several years, the shale boom has pushed US output to rival that of Saudi Arabia and Russia. That has enabled the United States to become less dependent on energy imports from other nations, particularly members of OPEC.
The considerations highlight frustrations of importers with a cartel that has influenced oil prices for over five decades.
It would also mark the first time that China, the world’s No.2 oil consumer and largest importer, would be involved in a co-ordinated release with the United States.
There was no immediate official reaction from OPEC+ members. The group has been raising output by 400,000 barrels per day a month, gradually unwinding record production cuts made in 2020 when the pandemic sank fuel demand.