Biden administration weighs largest ever draw from emergency oil reserve: Sources

US President Joe Biden is expected to announce a massive release of the country’s strategic oil reserves on Thursday, as the White House tries to lower fuel prices.

The Biden administration will call for the release of up to 180 million barrels of oil over several months from the Strategic Petroleum Reserve (SPR), four US sources told Reuters.

The reserve currently holds nearly 568 million barrels of crude oil, which is its lowest since May 2002, according to the US Energy Department.

The latest move, which would be the largest release in the near 50-year history of the SPR, would also mark the third time the US has tapped its strategic reserves in the past six months.

So far, however, the releases have failed to reduce prices as world demand has almost reached pre-pandemic levels while supply has tightened worldwide.

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The Biden administration has, in recent days, scrambled to respond to elevated gas prices, which have surged since Russia began a military operation in Ukraine in late February.

The United States and allies responded with hefty sanctions on Russia, the world’s third-largest oil producer. However, the sanctions and buyer reluctance to buy its oil could remove nearly 3 million barrels per day (bpd) of Russian oil from the market beginning in April, according to the International Energy Agency (IEA).

As of Wednesday, the average price of a gallon of gasoline in the US was $4.24, according to AAA, up markedly from $3.60 per gallon last month and $2.90 per gallon in 2021.

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The average regular-grade gasoline prices rose 22 percent over the past two weeks amid Western sanctions on Russia over its military operation in Ukraine which disrupted the global energy market.

Robert McNally, an energy analyst, says a release of the countyr’s oil reserves of this magnitude would be “unprecedented in size and duration.”

McNally, consultant and president of Rapidan Energy Group, an energy market research firm, said that it will be criticial to see whether the Europeans and Japanese join the US in tapping oil reserves.

“I would like to see the details, but it is not surprising — given that the sizable Russian supply risk has not gone away — that the administration is extending the releases from the SPR drawdown,” he said. “This would be the first ever, sequential, historic move if he made it.”

The development comes just before a meeting of the Organization of the Petroleum Exporting Countries and its allies, an oil producer group known as OPEC+ that includes Saudi Arabia and Russia. The members meet to discuss reducing supply curbs.

The US, the UK and others have previously called on OPEC+ to quickly boost output, however, OPEC+ is not likely to veer from its plan to keep increasing output gradually when it meets Thursday.

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