The US Strategic Petroleum Reserve (SPR) fell to its lowest level since 1984, as the country tries to take precautions against the possible rise in prices amid the world's main producers' decision to cut oil supply after global recession concerns lowered oil prices.
The decision of the Organization of the Petroleum Exporting Countries (OPEC) and Russia, also known as OPEC+, to cut production by 2 million barrels a day at the meeting held last week increased the lingering concerns about the global oil supply, which is already shrinking due to the Russia-Ukraine war.
Following OPEC+'s decision to cut production, the White House announced that the US will release another 10 million barrels of oil from its SPR next month.
US deputy energy secretary David Turk also signaled further consideration of more crude releases from SPR in the coming weeks and months, saying that the administration will be doing "everything we can" to tame the rise in oil prices.
These signals followed US President Joe Biden's announcement in March that one million barrels of crude oil per day would be released from the reserves for six months to combat the high oil and gasoline prices triggered by the sudden increase in demand after Covid-19 and the subsequent energy crisis.
- Balancing move to OPEC+ decision
Amid the uncertainties in the supply-demand balance, the US's move to use strategic reserves in an attempt to take precautions against price fluctuations sparked debates in the country.
According to the US Energy Information Administration (EIA) data, the reserves stood at 416.4 million barrels in the last week of September, the lowest level since July 1984 when it stood at 417.3 million barrels, meaning the reserves fell to the lowest level of almost four decades.
Despite the expectations that oil prices would hover above $100 per barrel after the OPEC+ decision would worsen, the rise in prices remained limited after the US move.
However, Biden was urged to stop depleting the country's strategic oil reserves and support energy production to combat the energy crisis, while criticisms were made that these steps had minimal impact on lowering prices and jeopardized the country's energy security at a time of critical global uncertainty.
- Established in 1975
The SPR, the world's largest supply of emergency crude oil, was established in 1975 primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program, according to the country's Energy Department.
The federally-owned oil stocks are stored in huge underground salt caverns at four sites along the coastline of the Gulf of Mexico and have an authorized storage capacity of 714 million barrels. It aims to serve as a significant deterrent to oil import cutoffs and a key tool in foreign policy.
By Ebru Sengul Cevrioglu
Anadolu Agency
energy@aa.com.tr