President Biden is slated to announce a large and lengthy release of oil from the nation’s strategic reserves, per several reports Wednesday night that prompted crude prices to tumble.
Why it matters: The reported size and duration point to how much Russia’s war is causing havoc in energy markets — and how the White House hopes to limit political fallout from high gas prices.
Driving the news: The release from the Strategic Petroleum Reserve could be 1 million barrels per day for up to 180 days, per reports in Bloomberg, Reuters and elsewhere that cite people familiar with the plan.
- Oil prices fell sharply on the news, with the U.S. benchmark WTI down more than 6% to $100.97 this morning and Brent seeing a similar drop.
- The White House did not provide comment to Axios. But later today Biden will give remarks on “actions to reduce the impact of Putin’s price hike on energy prices and lower gas prices at the pump for American families,” per Biden’s schedule.
The big picture: “It is hard to overstate the scale of this intervention if it bears out. It would be the largest drawdown volume announced in the 45-year history of the SPR by a factor of 3.6x,” the research firm ClearView Energy Partners said in a note.
What we’re watching: The effect of the plan on the tight oil market, and potential new releases from other nations coordinated through the International Energy Agency.
- The impacts are hard to tease out as international efforts to isolate Russia could lead to sharp declines in its exports that exceed the reported daily size of the SPR release.
- Goldman Sachs, in a note, said the reported plan would ease, but not resolve, oil’s “structural deficit” and help the market rebalance.
- “This would reduce the amount of necessary price-induced demand destruction, the sole oil rebalancing mechanism currently available in a world devoid of inventory buffers and supply elasticity,” Goldman Sachs noted.
- “This would remain, however, a release of oil inventories, not a persistent source of supply for coming years.”
Catch up fast: It’s the latest of several Biden administration attempts to try and tame prices via the SPR.
- In November, the White House announced 50 million barrels in releases, with another 30 million in early March, alongside 30 million from other nations.
The Energy Department, which manages the reserve, says it holds more than 568 million barrels of oil.
President Biden is slated to announce a large and lengthy release of oil from the nation’s strategic reserves, per several reports Wednesday night that prompted crude prices to tumble.Why it matters: The reported size and duration point to how much Russia’s war is causing havoc in energy markets — and how the White House hopes to limit political fallout from high gas prices.Driving the news: The release from the Strategic Petroleum Reserve could be 1 million barrels per day for up to 180 days, per reports in Bloomberg, Reuters and elsewhere that cite people familiar with the plan.Oil prices fell sharply on the news, with the U.S. benchmark WTI down more than 6% to $100.97 this morning and Brent seeing a similar drop.The White House did not provide comment to Axios. But later today Biden will give remarks on “actions to reduce the impact of Putin’s price hike on energy prices and lower gas prices at the pump for American families,” per Biden’s schedule.The big picture: “It is hard to overstate the scale of this intervention if it bears out. It would be the largest drawdown volume announced in the 45-year history of the SPR by a factor of 3.6x,” the research firm ClearView Energy Partners said in a note.What we’re watching: The effect of the plan on the tight oil market, and potential new releases from other nations coordinated through the International Energy Agency.The impacts are hard to tease out as international efforts to isolate Russia could lead to sharp declines in its exports that exceed the reported daily size of the SPR release. Goldman Sachs, in a note, said the reported plan would ease, but not resolve, oil’s “structural deficit” and help the market rebalance.”This would reduce the amount of necessary price-induced demand destruction, the sole oil rebalancing mechanism currently available in a world devoid of inventory buffers and supply elasticity,” Goldman Sachs noted.”This would remain, however, a release of oil inventories, not a persistent source of supply for coming years.”Catch up fast: It’s the latest of several Biden administration attempts to try and tame prices via the SPR.In November, the White House announced 50 million barrels in releases, with another 30 million in early March, alongside 30 million from other nations.The Energy Department, which manages the reserve, says it holds more than 568 million barrels of oil.