Oil prices are down more than 1% after U.S. President Joe Biden authorized the release of 50 million barrels of crude oil from America’s strategic reserves.
The release of emergency oil reserves is part of a plan that President Biden’s administration has negotiated with China, India, Japan, and other nations, to lower energy prices that have been rising in recent weeks and putting pressure on consumers as costs rise at the gas pumps.
The coordinated release is the first such move of its kind. In total the U.S. will release 50 million barrels from the country’s Strategic Petroleum Reserve, the White House has announced.
Brent crude futures fell 69 cents U.S., or 0.87%, to $79.01 U.S. per barrel and U.S. West Texas Intermediate (WTI) crude futures were down 98 cents U.S., or 1.28%, at $75.77 U.S.
The OPEC+ alliance between the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia has rejected repeated calls from Washington, D.C. to pump more oil and increase global output.
Oil prices have dropped below $80 U.S. a barrel from a three-year high of more than $86 U.S. on October 25 amid talks of a coordinated release of oil reserves and potential hit to energy demand from a fourth wave of COVID-19 in Europe.
Prices at the pump have followed the recent ascent, and are currently hovering around their highest level in seven years in the U.S.
As of November 19, the Strategic Petroleum Reserve held 604.5 million barrels of oil spread across four sites, according to the U.S. Department of Energy. It takes 13 days after a presidential announcement for the oil to hit the market.
In total, the Strategic Petroleum Reserve, which was founded in 1975 after the Arab Oil Embargo, can hold 727 million barrels of oil.
The release from U.S. oil reserves is expected to have only a temporary impact on prices, say many analysts, especially as COVID-19 cases and new lockdown measures spread throughout Europe.