The release of oil reserves As part of a plan to lower fuel costs, US President Joe Biden ordered the release of oil from America’s reserves.
This is the largest release of oil in six months since the reserve was created in 1974.
Oil prices fell on reports of the move, which is designed to ease a supply crunch sparked by the war in Ukraine.
Analysts say the release – of about 1 million barrels a day – may not fully resolve the energy crisis.
According to Mr. Biden, the release would be “a bridge until the end of the year when domestic production ramps up”.
Companies should pay extra if they decide not to drill oil wells on land leased from the government, and investments should be made to accelerate the adoption of greener energy sources.
As a result of Mr Biden’s remarks, West Texas Intermediate fell more than 7% to $100 a barrel, while Brent Crude fell nearly 5.4% to around $107.
Fuel prices have become a major political issue throughout the world, including in the US, which will hold mid-term elections in November.
Biden called the release of oil from the Strategic Petroleum Reserve – which is less than two days of global consumption – “unprecedented”.
How much oil is held in US reserves and how much does the world consume?
The Strategic Petroleum Reserve was created following the energy crisis in the 1970s
The caverns are found in salt domes along the Gulf Coast in Texas and Louisiana
As of 25 March, the reserves held 568 million barrels, down from more than 700 million at their peak in 2009.
This year, the International Energy Agency forecasts that petroleum and liquid fuels will be consumed at rates of more than 100 million barrels per day
Mr Biden’s announcement on Thursday marked the third time in six months that he has moved to reduce America’s crude oil reserves
However, additional reserves are unlikely to be enough to compensate for lost supplies from Russia – the world’s second-largest oil exporter after Saudi Arabia.
The release of stock will help to keep prices in check in the short term, but we believe a rise in global production is needed to spark a sustained fall in prices,” said Edward Gardner, commodities economist at Capital Economics.
After Russia’s invasion of Ukraine and sanctions imposed by the United States and its allies, Brent crude, the global benchmark for oil prices, hit $139 a barrel earlier this month.
The price of energy has fallen since then, but crude oil is still almost 70% higher than it was a year ago.
As economies began to reopen after the Coronavirus lockdown measures were relaxed, global energy demand had been rising prior to Russia’s invasion of Ukraine.
As a result of the war in Ukraine, Russian oil exports may decrease by as much as 3 million barrels per day.
Major energy producers are either at full capacity or unwilling to increase production.
Russia and the Organization of Petroleum Exporting Countries (Opec) confirmed on Thursday that they were sticking to their existing deal to gradually increase production.
Members of the group of oil producing nations decided to increase output despite pressure from the United States, UK, and other countries.
The group’s consensus indicated that the market was well balanced.
Global geopolitical developments are causing the current volatility, not fundamentals.”
IEA has called an emergency meeting but it’s been canceled
The US has released its oil reserves, but it is unclear whether other countries, including the UK, France, Germany and Japan, will follow.
He said he was coordinating the release of the report with Western nations
Approximately 30 to 50 million barrels are expected to be released from stockpiles.
Japan also announced Thursday that it would take emergency measures to ensure
Due to the war and sanctions, the supply of seven strategic materials is disrupted in Russia and Ukraine.
It includes measures to boost domestic production, alternative procurement, and economic development, the country’s industry minister said.
The development of technologies to reduce the consumption of materials such as liquefied natural gas and gases used in computer chip manufacture.
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