(Hill) – The US will release 15 million barrels of oil from its strategic reserves, Biden administration officials plan to announce on Wednesday.
15 million barrels is the last tranche payment of 180 million published in March and comes as energy prices threaten to rise again less than a month before Election Day.
Rising prices have emerged as a drag on Democrats, as polls show the economy is one of the issues most important to voters as they head to the ballot box. Early voting began in some states this week.
The sale comes after OPEC+ announced earlier in October that it would cut production by 2 million barrels of oil per day. Oil prices fell as low as $75 a barrel in September before recovering to more than $90 after the OPEC announcement. West Texas Intermediate crude is now at $83 a barrel.
When asked about the possibility of restricting oil exports, officials also said they were keeping “all tools on the table.”
U.S. oil inventories are now at their lowest level since the mid-1980s, and senior administration officials announced Tuesday night a plan to buy crude oil to replenish the Strategic Petroleum Reserve, sending a market signal to producers to keep pumping oil ahead of November’s midterm elections. .
Officials said the buyback would begin when prices are between $67 and $72 a barrel, indicating the administration would like to see oil prices fall.
President Biden wants the energy sector to “get the signal and increase production” and make sure they give “the consumer the right price” while “taking this profit,” a senior administration official said.
“The profit that refiners are now making on each gallon of gasoline is about twice what is normal for this time of year, and the retail margin on the refinery price is more than 40 percent above normal levels,” administration officials said. in statement.
“These large industry profit margins – adding more than $0.60 to the average price of a gallon of gas – have kept pump prices higher than they should be. Keeping prices high even when input costs are falling is unacceptable, and the president will call on companies to pass their savings on to consumers – now,” the statement said.
The Department of Energy will also introduce a rule allowing it to enter into fixed-price contracts through competitive bidding for crude oil products to be delivered in the future.
Geopolitical forces are bearing down on energy markets now as the Northern Hemisphere prepares for winter.
The war in Ukraine is playing out in Europe’s energy supply, which in the past was heavily dependent on Russian gas exports. Reports of pipeline sabotage came in over the summer as conflicts between Russia and Ukraine intensified.
OPEC’s production cuts have resulted in accusations against its most influential member, Saudi Arabia, that it has sided with Russia in the war.
China’s import demand could also rise as the country continues to lift various COVID-19 restrictions.