The United States is ready to release oil from its strategic petroleum reserve as the crisis between Russia and Ukraine pushes prices up.
Russia is the third largest oil producer, after the United States and Saudi Arabia, and pumps about 10 percent of world demand. Little of that goes to the United States, but mounting tensions between Russia and the West have helped to push prices up globally, which were already the highest since 2014.
White House press secretary Jen Psaki said Wednesday that a reserves release was “definitely an option on the table.”
America’s emergency supply, which contains about 580 million barrels of oil, has already been tapped recently: President Biden ordered the release of 50 million barrels in November as he tried to cut gas prices that have contributed to high inflation and OPEC Plus, the oil producer cartel, including the Organization of Petroleum Exporting Countries, Russia and others, to pump more oil. The United States consumes about 20 million barrels of oil per day.
That release had little or no effect. Oil prices, which were around $76 before the announcement, actually rose after that – analysts had expected a bigger release. Prices eventually fell after the announcement of the highly contagious Omicron variant of the coronavirus, sparking fears of another travel slowdown.
But since then, the price for a barrel of US crude has risen. Brent oil, the global benchmark, approached $100 a barrel on Tuesday, and West Texas Intermediate crude, the US benchmark, has crossed $95 a barrel. Both have since fallen slightly in price. Prices at the pump have also risen.
The pain of a disruption can be most acute in Europe. Russia supplies much of the region’s natural gas, which has risen in price over the past year. Stocks in the region are low and relief is unlikely to come anytime soon – Germany said on Tuesday it halted regulatory progress on Nord Stream 2, a new natural gas pipeline linking it to Russia, part of a series of coordinated sanctions after President Vladimir V. Putin of Russia ordered troops to breakaway regions of Ukraine. There is also concern that Mr Putin could halt or restrict supplies in retaliation.
So far, the sanctions have not directly targeted Russia’s energy industry and have had no direct impact on supply. And prices have stabilized on last week’s reports of progress in talks to revive a US-Iran nuclear deal, a move that could see tens of millions of barrels of oil hit the market.