President Biden announced earlier this week that there will be an additional release of crude oil from the Strategic Petroleum Reserve (SPR). The scheduled release of ten to fifteen million barrels of crude oil by the Biden Administration in December is the last of the one hundred eighty million barrels President Biden authorized in March 2022 in an effort to drive down fuel prices. After the release of barrels in December, there will be an estimated four hundred million barrels left in the reserve.
The release of the barrels from the Strategic Petroleum Reserve in December coincides with the European Union embargo on Russian oil. The White House intends to offset the expected volatility in the oil market because of the scheduled embargo. The European Union has condemned Russia for using energy as a weapon to drive prices since the invasion of Ukraine. Ariadna Rodrigo, European Union sustainable finance manager stated, “If EU governments are serious about stopping war, they need to cut the European nuclear industry’s umbilical cord to the Kremlin and focus instead on accelerating energy savings and renewables.”
The Biden Administration has stated they intend to purchase oil from companies to refill the SPR at a price of $67 to $72 a barrel. That level is currently $10 below benchmark prices. As we approach the midterm elections, inflation, driven partly by high energy prices, will be a major topic of discussion. Time will tell if the scheduled release of more oil will help stabilize the market, or if more will need to be done as we enter 2023.