Home / Economy / US to release oil from reserves, in joint plan with India, other nations
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US President Joe Biden has authorised the release of 50 million barrels of oil from strategic reserves to cool down oil prices and address lack of supply around the world, a move that could draw the ire of OPEC.

The announcement is in parallel with other major energy consuming nations, including China, India, Japan, Republic of Korea, and the UK, a White House statement said.

Joe Biden, facing low approval ratings amid rising inflation ahead of next year's congressional elections, has repeatedly called on the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to pump more oil.

But the group has rebuffed the requests, as members have already been struggling to meet its existing targets for production increases and amid fears a resurgence of coronavirus cases could once again drive down demand.

Simultaneously, India has also announced that it has agreed to release 5 million barrels of crude oil from its strategic petroleum reserves.

The ministry of petroleum said India strongly believes that the pricing of liquid hydrocarbons should be reasonable, responsible and be determined by market forces.

"India has repeatedly expressed concern at supply of oil being artificially adjusted below demand levels by oil producing countries, leading to rising prices and negative attendant consequences," it said.

India stores about 38 million barrels of crude oil in underground caverns at three locations on the east and west coast.

Of this, about 5 million barrels will be released, starting as early as 7-10 days, an official, who wished not to be named told PTI.

The stocks will be sold to Mangalore Refinery and Petrochemicals Ltd (MRPL) and Hindustan Petroleum Corp Ltd (HPCL) which are connected by pipeline to the strategic reserves.

India is the world's third-largest oil consumer and importing nation and has been severely impacted by the relentless rise in international oil prices. Since the US move, global oil prices are on the decline. Brent crude was trading at $78.72 per barrel, down from $81.24 a barrel 10-days back. On October 26, it had hit a multi-year high of $86.40.

Under the US plan of action for the oil release, 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the reserves in the years ahead.

"The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the strategic petroleum reserve over time to meet future needs," the White House Statement said.

Further, 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.

The US reserves, held in underground depots in Texas and Louisiana, are the largest emergency supply of oil in the world.

As output rises, oil prices are already down nearly 10% in the last few weeks.

OPEC+ states, including US allies in the Gulf, meet again on December 2 to discuss policy but have so far shown no sign of any change in tack to heed US calls.

The unprecedented effort by Washington to team up with major Asian economies to lower energy prices sends a warning to OPEC and other big producers that they need to address concerns about high crude prices, up more than 50% so far this year.

(With inputs from agencies)

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