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U.S. and Western officials are considering a possible release of emergency oil stocks if new deliveries can not prevent another sharp rise in prices, according to people close to the record.
The Trump administration is actively evaluating whether to tap into the country's emergency oil stocks while simultaneously pushing other countries to boost their production, according to people close to the record . The discussions are part of a broader effort to ensure that oil markets remain well supplied despite a multitude of global production disruptions and increasing global demand.
Any depletion of the Strategic Petroleum Reserve is not imminent.
Such releases have been rare, and usually only as a last resort. Current discussions about such a measure – albeit preliminary – point out that consumer nations are increasingly worried about supplies. OPEC and Russia have pledged to pump more crude to ease the markets, but a host of global production constraints – and growing demand – have raised questions about whether this new oil would be enough
. According to Fatih Birol, director of the International Energy Agency, a group that advises industrialized countries on energy policy and coordinates emergency oil spills. The IEA spokesman declined to comment on the dinner, but said: "We are ready to act if necessary to avoid the worst. to ensure that markets remain well supplied.
A few months ago, the release of strategic oil reserves seemed far-fetched. In the past, such a move has been an option of last resort, often triggered by war. There were only three news releases coordinated by the IEA, the most recent being in 2011 at the height of the Arab Spring
. A number of major supply disruptions have, however, combined with rising demand for oil to drive up prices. series of highs of 3 and a half years. A collapsed economy in Venezuela has reduced production there. US sanctions against Iran threaten to stop the country's exports.
Until last week, the rebels had forced the closure of Libya's oil export terminals. Highlighting the tightening of the markets, when the Libyan national oil company announced Wednesday that these facilities would reopen soon, oil prices fell.
Last Friday, international crude prices fell 3% over the week. But they are still up 11% since the beginning of the year.
Saudi Arabia, member countries of the Organization of Petroleum Exporting Countries and Russia have all promised to increase their production to fill any deficit. Oil market observers, however, are skeptical, they have the ability to fully compensate for all those missing barrels, and keep up with the growing demand.
In its monthly report on the oil market, the IEA warned Thursday that reserve production capacity, it can quickly turn on in case of emergency. This could make the world vulnerable to the next unexpected failure. The superior output of Saudi Arabia "is at the expense of the world's reserve capacity cushion, which could be reached to the limit."
IEA members agree to hold 90 days of oil stocks for emergencies. The Paris-based agency coordinates the logistics of an outing, although individual countries have the last word to know whether they participate or not. They can also act unilaterally, as did the United States last year when they released about 5 million barrels as a result of refinery failures during Hurricane Harvey
. United States, oil prices rise at a politically sensitive time. congressional elections. Mr. Trump's Republican colleagues are trying to keep control of both chambers. Gas prices – which are rising with oil – have always been a burning issue for US voters.
In recent months, Mr. Trump has blamed OPEC for higher prices, cajoling the cartel on Twitter and asking it to increase its production. He also publicly urged Saudi Arabia to increase production.
"Few things terrify an American president like rising prices at the pump. Period. End of story," said
Bob McNally,
a former energy advisor at the time president
George W. Bush
and now a private consultant.
Energy Secretary Rick Perry said the SPR was intended for emergency situations and not for easing gas prices. "He is there for a type of emergency response, not like a market manipulator," he told reporters last month.
According to people familiar with the debate within the Trump administration, any major release of the United States would be contingent on a further significant increase in oil prices from current levels – more than 10%. A release would also be possible only if it became clear that Saudi Arabia, Russia and other major producers were failing to replace lost production in Venezuela and Iran, they added. .
Reduce to the scale to ensure that the system is ready for a larger, if necessary, according to several people familiar with the subject. Such an issue might not add a significant amount of crude to world markets, but would send a powerful signal that the United States is ready to act if necessary, according to this thought.
The US SPR consists of about 660 million barrels It was created as a result of the 1973-74 Arab oil embargo to guard against disruptions of imported oil
. about whether it's as important now as it once was. Congressional studies have also raised in recent years questions about the state of infrastructure that supports the reserve. The development of shale oil production has forced pipeline operators to reverse the flow of some key roads, making it more difficult for US refiners to rehabilitate quickly if they need them.
Write to Benoit Faucon at [email protected] and Timothy Puko at [email protected]
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