US releases emergency oil in bid to cool prices

The United States will release 50 million barrels of crude from the US Strategic Petroleum Reserve to help cool oil prices,that will start hitting the market in mid- to late-December, the White House said yesterday.

World oil prices fell by more than 1 percent on the news.

The release will take the form of a loan and a sale and was being in made concert with other releases from strategic reserves by China, India, South Korea, Japan and Britain, senior Biden administration officials said.

It was the first time the United States has coordinated releases with some of the world's largest oil consumers, the officials said.

Under the US plan of action for the oil release, 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the reserves in the years ahead. "The exchange is a tool matched to today's specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the strategic petroleum reserve over time to meet future needs," the White House Statement said.

Further, 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized. The US reserves, held in underground depots in Texas and Louisiana, are the largest emergency supply of oil in the world.

Oil prices have dropped below US$80 (HK$624) a barrel from a three-year high of more than US$86 on October 25 amid talks of a coordinated release and potential hit to energy demand from a fourth wave of Covid-19 cases in Europe.