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US to release emergency oil reserves in response to high prices

FILE PHOTO: A maze of crude oil pipes and valves is photographed during a Department of Energy tour of the Strategic Petroleum Reserve in Freeport, Texas, United States June 9, 2016. REUTERS / Richard Carson / File Photo

Nov 23 (Reuters) – The United States is expected to announce a release of crude from its emergency reserves on Tuesday in the form of a loan as part of a plan it has crafted with Asia’s major energy consumers to cut oil prices. energy, according to a US government source familiar with the situation.

The aim of this measure is to control the rise in energy prices after the group of OPEC producers and their allies, known as OPEC +, rejected repeated requests from Washington and other consuming countries to pump crude more quickly to meet the growing demand.

US President Joe Biden is facing low approval ratings due to high prices for gasoline and other consumer items in the midst of recovering from the coronavirus pandemic, posing a threat to him and his Democratic Party of ahead of the US congressional elections next year.

A “swap” of the US Strategic Petroleum Reserve (SPR) will be announced on Tuesday in a coordinated move with several countries, said the source, who did not specify the amount of oil to be released from the US. Bookings.

Biden has already asked China, India, South Korea and Japan to release their strategic oil reserves in concert with the US. Japanese and Indian authorities are working on how to do it, Reuters reported.

Washington’s unprecedented effort to partner with major Asian economies to lower energy prices is intended as a warning to major producers to pump more oil to address concerns about high fuel prices. in the most powerful economies.

OPEC +, which brings together the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, is scheduled to meet on December 2 to discuss its production strategy.

The impact of a coordinated oil release would depend on the timing and quantity, but a release of more than about 60 million barrels in about 30 days would be seen by the market as “very negative for prices,” according to analyst Vivek Dhar. of the Commonwealth Bank of Australia.

“This situation comes at a time when this market was changing and world oil reserves are increasing. So this could cause prices to fall more steeply than is thought,” he said, pointing to the new restrictions. against the coronavirus in Europe.

(Information from Valerie Volcovici and Timothy Gardner; additional information from Sonali Paul in Melbourne; writing by Richard Valdmanis; editing by Richard Pullin; translated by José Muñoz at the Gdańsk writing)

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