Fighting gas prices, U.S. to release 50M barrels of oil

WASHINGTON — President Joe Biden on Tuesday ordered 50 million barrels of oil released from America’s strategic reserve to help bring down energy costs, in coordination with other major energy consuming nations, including India, the United Kingdom and China.

The U.S. action is aimed at global energy markets, but also at U.S. voters who are coping with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel. Gasoline prices are at about $3.40 a gallon, more than 50% higher than a year ago, according to AAA.

The government will begin to move barrels into the market in mid- to late-December.

But the action is unlikely to immediately bring down gas prices significantly as families begin traveling for the holidays. Gasoline usually responds at a lag to changes in oil prices, and administration officials suggested this is one of several steps toward ultimately bringing down costs.

Oil prices had dropped in the days ahead of the announced withdrawals, a sign that investors were anticipating the moves that could bring a combined 70 million to 80 million barrels of oil onto global markets. But in Tuesday morning trading, prices shot up nearly 2% instead of falling.

The market was expecting the news, and traders may have been underwhelmed when they saw the details, said Claudio Galimberti, senior vice president for oil markets at Rystad Energy.

Shortly after the U.S. announcement, India said it would release 5 million barrels from its strategic reserves. And the British government confirmed it will release up to 1.5 million barrels from its stockpile. Japan and South Korea are also participating. Administration officials say it’s the biggest coordinated release from global strategic reserves.

The actions by the U.S. and others risk counter moves by Gulf nations, especially Saudi Arabia, and by Russia. Saudi Arabia and other Gulf countries have made clear they intend to control supply to keep prices high for the time being.

As word spread in recent days of a coming joint release from U.S. and other countries’ reserves, there were warnings from OPEC interests that those countries may respond in turn, reneging on promises to increase supplies in coming months.