[News] The United States' maneuver to try to lower the price of oil (and why it could generate a clash with OPEC)

[S e u o n g]

 

The United States government announced on Tuesday that it will release 50 million barrels of oil from its "strategic reserves" to face the increase in the price of gasoline, which is affecting the pocket of citizens.

This is a concerted move that is not limited to the United States. The Joe Biden government managed to persuade other large economies such as China, Japan, the United Kingdom, India and South Korea to also release part of their strategic reserves and thus help increase supply in the oil market.

During the last year and a half, the flow of oil has been restricted by the effects of an agreement between the OPEC countries and other major producers such as Russia that have sought to keep the market under control in order to prop up prices.

The United States has tried in vain to convince OPEC members about the advisability of increasing the supply of oil in a more accelerated way to respond to the recovery of the world economy after the impact of the pandemic, but these producers have opted for a gradual and limited increase.

That the White House now decides to resort to strategic reserves to deal with this type of situation is an unprecedented measure that, in addition, may generate tensions with the OPEC countries, according to analysts.

 

An emergency resource
The SPR was created in 1975 after the economic crisis caused by the oil embargo that Arab countries imposed on Western governments for their support of Israel during the Yom Kippur War in 1973.

This measure caused crude oil prices to quadruple by 1974 and generated fuel shortage problems in the United States.

From that moment on, the United States established this strategic reserve to protect itself from the fluctuations of the world oil market and from any possible interruption in supply.

Although other large consumers of crude oil also adopted similar measures, the US SPR is the largest in the world and currently consists of some 620 million barrels that are stored in a system of caves dug in saline rock that extend from Baton Rouge (Louisiana) to Freeport (Texas).

In the past, the United States has resorted to SPR in emergency circumstances such as during the 1991 Gulf War or after suffering the devastating effects of Hurricane Katrina in 2005, which affected much of the oil infrastructure in the Gulf of Mexico. Also in other specific emergencies it has "lent" part of its crude to some refineries to allow them to operate while a specific supply problem in the market is being corrected.

 

 

 

Link: https://www.bbc.com/mundo/noticias-internacional-59397457