With U.S. president Joe Biden’s much-feared release of inventory from that country’s Strategic Petroleum Reserve proving to be smaller than expected, crude prices on Tuesday continued their upward trajectory – this time by 2.3 percent, reports Ship & Bunker.
West Texas Intermediate rose $1.75 to settle at $78.50 per barrel, while Brent settled up $2.61 at $82.31 per barrel after it was learned that although the headline size of the U.S. release is large, much of it will be borrowed – to be returned later.
Impact of SPR release is temporary
Biden sanctioned 50 million barrels to be released from the stockpile, when even the highly-anticipated 60 million barrel release was calculated by experts to have little to no effect in either alleviating high prices at the pump or denting the global supply shortfall.
China, Japan, India, South Korea, and the U.K. will also release oil from their reserves in short order.
Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association (TIPROA) stated in a note, “The Biden Administration knows that any impact of an SPR release is a temporary, inadequate quick fix for addressing higher energy prices.”
“Short-sighted policy decisions like an SPR release or asking OPEC to increase production will have serious and long-lasting implications for our national security, economy and the environment.”
Energy crisis amid misguided energy policy
Leslie Beyer, chief executive officer at the Energy Workforce & Technology Council, stated, “The current energy crisis is a result of misguided energy policies that raise the cost of fuel and discourage U.S. energy production; the Biden Administration should embrace energy policies that spur the production of the cleanest and most reliable energy in the world, to ensure America maintains energy independence and security.”
For her part, Amrita Sen, director of research at Energy Aspects, said many of the countries following Biden’s lead “have been releasing SPR throughout the year” and that the latest rounds are merely political posturing that will result next year in a bullish market when the oil is due to be repaid.
Meanwhile, Goldman Sachs on Tuesday noted that the inconsequential amount of oil released by Biden will likely not compel the Organization of the Petroleum Exporting Countries (OPEC) to increase output aggressively, as many pundits had feared
Did you subscribe to our daily newsletter?
