It remains unclear whether part of the 180 SPR release in the United States will be a completely separate effort or whether some of these barrels will be part of the IEA release. Earlier this year, the United States agreed to release 30 million barrels as part of the ILO boost. What is clear is that the success of these oil-price-fixing issues is rather unlikely. The United States last year announced the release of 50 million barrels in an effort to reduce pump prices, which eroded American purchasing power and burdened the president’s approval ratings. This pushed prices down for a few days before recovering, due to continued discipline among US producers, equal discipline in OPEC + and a relentless increase in demand for the commodity. Russia then invaded Ukraine and the United States banned imports of Russian crude and fuel. It has also imposed heavy sanctions on the country’s financial system, making the payment for Russian crude too much and fueling too much of a headache for the international dollar-based industry. Prices soared again before some fell, but remain firmly in triple digits. As of mid-March, according to the Ministry of Energy, about 30 million barrels of crude oil from the strategic oil reserve had been sold or leased. That’s more than half of the 50 million barrels announced in November, which appears to have had little effect on price movements. But the new version of the reserve is much bigger, so it should make a difference, right? It amounts to about 1 million bpd for several months, according to reports on the White House plans in this regard. Unfortunately, but it is important, the fundamental volumes of oil have not changed much since November. The American shale oil producers, the companies that a few years ago provoked the debate among analysts that OPEC was becoming increasingly irrelevant, have rearranged their priorities. They no longer strive for growth at all costs. Now they are striving for happy shareholders. This gave more opportunities to smaller independent drillers without shareholders to be happy. However, they have also faced challenges, mainly in the form of insufficient funding, as the energy transition has left banks worried about their reputation and that of their own shareholders. Pandemic-related supply disruptions have also affected the US oil industry’s ability to expand production. Frac sand, cement and equipment are among the things that have been reported to be lacking in slate patch. Now, there is also a shortage of steel pipes. OPEC, meanwhile, is operating as usual, keeping its commitment to add about 400,000 bpd to its oil markets each month until its cogeneration returns to pre-pandemic levels. Just this week, the cartel approved another monthly increase of 432,000 bpd to its combined production despite increasingly desperate calls from the US and the IOC for more barrels. On the contrary, OPEC is happy to trade with Russia. Both Saudi Arabia and the United Arab Emirates, the two OPEC members that actually have the capacity to boost production beyond their quotas, have considered it unwise to undermine their cooperation with Russia by accepting the request. of the West for more oil. In this environment, releasing any number of barrels from the strategic reserves could only provide a very brief relief to the pump. Then, it can make things even worse. As one oil market commentator said on Twitter about the SPR release news, the White House will sell these barrels for $ 100 and then may need to buy them for $ 150. Indeed, one thing that tends to be overlooked in times of turmoil is that any country’s strategic oil reserves need to be replenished. It is not called a strategy for laughter. And a stock release of 180 million barrels will be quite attractive to the US SPR, which is currently at over 580 million barrels. If the fundamentals of oil remain the same, prices will not be lower when it comes time to replenish the SPR. This seems to be the most likely development. The EU, the United Kingdom and the United States have stated that sanctions against Russia will not be lifted even if Moscow concludes a peace agreement with the Ukrainian government. This means that Russian oil will continue to be difficult to find for those who trade in dollars or euros. According to the ILO, the deficit could be 3 million barrels per day, to be felt this quarter. OPEC + does not deviate from its course. In some good news, at least, US oil production rose last week for the first time in more than two months, by 100,000 bpd. By Irina Slav for Oilprice.com More top readings from Oilprice.com:
