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The United States has said it would release millions of barrels of oil from its strategic reserves as part of an international effort to dampen down rising fuel prices.
The Biden administration said it would work in co-ordination with China, India, South Korea, Japan and Britain to cool prices after oil exporting countries rebuffed calls for increased production levels.
The US said on Tuesday it would release 50 million barrels from its reserves. Officials said Washington had approached major Asian energy consumers to help to drive down oil prices from near three-year highs.
Officials said it was the first time the US government had co-ordinated such a move with other major global oil consumers.
Inflation is currently at a 30-year high in the United States and this, and rising fuel prices in particular, are of acute concern to the Biden administration ahead of mid-term elections next November. Mr Biden’s poll ratings have slumped in recent weeks .
The Biden administration has repeatedly asked the Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, to pump more oil.
OPEC+, which includes Saudi Arabia and other US allies in the Gulf, as well as Russia, has rebuffed requests to pump more at its monthly meetings. It meets again on December 2nd to discuss policy but has so far shown no indication it will change tack.
US officials believe that the rise in prices is due to supply constraints and surging demand as the economy recovers from the shocks caused by the Covid-19 pandemic.
‘Potentially illegal conduct’
However, last week president Joe Biden asked Federal Trade Commission Chair Lina Khan to examine oil and gas companies and their role in rising gasoline prices.
Citing “potentially illegal conduct,” Biden said pump priceswere rising even as industry costs were declining.
In a letter to Ms Khan he said: “Usually, prices at the pump correspond to movements in the price of unfinished gasoline.”
“But in the last month the price of unfinished gasoline is down more than five percent while gas prices at the pump are up three percent.”
“I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct,” the president wrote. He asked Khan to “bring all of the commission’s tools to bear if you uncover any wrongdoing.”
US officials said on Tuesday that the release of stocks from the U.S. Strategic Petroleum Reserve would come in the form of a loan and a sale to companies,
The 32 million barrels loan will take place over the next several months, while the administration would accelerate a release of 18 million barrels in sales already approved by Congress.
“We will continue talking to international partners on this issue. The president stands ready to take additional action if needed, and is prepared to use his full authorities working in coordination with the rest of the world,” a senior U.S. administration official told reporters.
India said in a statement it would release five million barrels. South Korea said it had agreed to participate but did not give volumes. Japanese media said Tokyo would announce its plans on Wednesday.
Benchmark Brent crude was trading above $80 a barrel on Tuesday, up from its levels before the announcement but still well below last month’s three-year high of more than $86.