WASHINGTON: President Joe Biden will announce Wednesday he's putting the final 15 million barrels on the market from a record release of US strategic oil reserves, with more releases possible if energy prices spike, a senior US official said.
The new tranche of oil from the Strategic Petroleum Reserve will be "completing the 180 million barrel release authorized in the spring," in response to price hikes linked to Russia's invasion of Ukraine, a senior US official said Tuesday.
The decision to make the biggest ever dip into the emergency oil reserves -- usually kept for responding to situations such as hurricane-related shutdowns at oil refineries -- was Biden's gambit to calm energy markets and shield the world's biggest economy from Ukraine war shocks.
Major energy exporter Russia was hit with US and European sanctions soon after it invaded Ukraine in February, causing turmoil on markets. In addition, the Kremlin has threatened to use its leverage over energy supplies as an economic weapon against the West, which supports Ukraine's fight to repel the invasion.
For Biden there are serious domestic concerns, with gasoline prices at one point averaging more than $5 a gallon, causing nationwide anger. While prices have since moderated, inflation remains the biggest factor driving Republican hopes of defeating the Democrats in November's midterm legislative elections. The senior official, who spoke on condition of anonymity, stressed that the Strategic Petroleum Reserve was not being used irresponsibly.
At the same time as announcing the 15 million barrel drawdown for delivery in December -- and flagging the possibility of more to come -- Biden is highlighting a plan to refill the reserve as soon as prices hit around $67-72 a barrel, the official said.
This is "an important signal for producers that the SPR will be part of helping to moderate and stabilize price flows, not only when prices are going high but when prices are going low," he said.
The official described the SPR use as a "brilliant" bridge out of a crisis moment, playing "an incredibly constructive role through a very challenging time period."