Along with the Putin-induced pump price increases, the issue of oil sales from strategic reserves, which the US has been evaluating for a while, has been announced. Accordingly, the US will release 1 million barrels of extra oil from strategic reserves for 6 months. The shortage of energy, coupled with a significant shortage of Russian oil in the market, seems to push the gallon price of gasoline, which has been on the rise since the beginning of the war, higher. And at the moment, energy inflation is an extra issue in many countries, especially in the US. This is in the first stage plan; To stimulate domestic production, the Strategic Petroleum Reserve aims to immediately increase supply through a historic release that will act as a bridge to more supply in the coming months.
Brent and WTI oil price action since the beginning of the year… Source: Bloomberg
According to the White House statement; The Department of Energy will use the proceeds from the release to restock the Strategic Petroleum Reserve for years to come. This will provide a signal of future demand and help stimulate domestic production today, ensuring the Strategic Petroleum Reserve continues to respond to future emergencies. Biden is coordinating this action with allies and partners around the world, and other countries are expected to join in, with total emissions averaging over 1 million barrels per day. The President will also call on Congress to pass the plan to accelerate the clean energy transition in America.
While Russia is backing down by citing technical details for payments in rubles, Germany's statement and buyers' refusal to pay in rubles, and Putin's statement that the energy flow will be halted if no rubles are paid, still endanger Europe's energy security. In this process, it is very critical for the US to make record production with its strategic reserve move and to make shipments to Europe, in terms of becoming the central base in production. The deficit arising from Russian oil will want to be closed to a certain extent with American oil. Biden's statement at this point is important: "Many companies did not do their part and said that they would not increase production even if oil was $200". Pressure will increase on companies to direct unused oil wells to production and increase capacity.
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