Joe Biden’s administration is extremely concerned about high oil prices. Leading exp-orters refused to follow Washington’s lead, and now the head of the White House is “considering all the available tools.” To curb prices on the domestic market, the Ministry of Energy intends to open strategic reserves. RIA Novosti figured out whether this will help.
Since January, gasoline has risen in price from $ 0.-62 to $ 0.83 per liter, updating a seven-year record. Americans blame OPEC + for the price hike. The cartel is now increasing daily production by 400,000 barrels every month, gradually returning to normal after the largest single cut in history last year. However, this is not enough for the United States.
“The pandemic has affected the supply chain. But if we talk about gasoline, this is a consequence of the fact that Russia and OPEC are refusing to produce more,” says Biden.
“We have an energy crisis,” said Amos Hochstein, a senior US diplomat specializing in energy. “Produ-cers must ensure that oil and gas markets are balanced.”
Bloomberg sources said the US is “preparing measures against OPEC +.” Cit-ing diplomats and industry insiders, the agency talks about forming the strongest coalition in several years to pressure the cartel.
All according to plan
Japan and India are also calling for increased produ-ction as restrictions are lifted and production ramped up around the world. Ana-lysts at Rystad Energy, an energy research company, point to more than $ 80 a barrel as a result of a “supply and demand mismatch.”
However, neither persuasion nor threats led to anything: the participants in the OPEC + agreement dec-ided to maintain the same pace. The unified position of Russia and Saudi Arabia has become decisive.
OPEC + also advised to pay attention to other energy markets. In particular, gas, which has shown an unprecedented rise in prices and “extreme volatility” in recent months.
Such restraint is expl-ained by the risks of a new overabundance. According to the participants in the agreement, the prices for $ 80 do not indicate the potential of the market to accept additional volumes. On the contrary, “there are a number of uncertainties that can play to lower prices,” said Russian Deputy Prime Minister Alexander Novak. Demand falls in winter – consumers have already replenished inventories, and the low car season is coming, with fewer tourist trips and less demand for gasoline. Do not forget about the impact on the situation of new strains of coronavirus.
The effect is minimal
The US Strategic Oil Reserve (SPR) is huge reserves. More than 600 million barrels are stored underground in Louisiana and Texas for serious emergencies. This is enough to replace all imports from OPEC + countries for more than a year. While the capsule was slightly opened. According to Bloomberg – by 3.1 million barrels. How much the Ministry of Energy will decide to throw on the market remains to be seen.
However, according to analysts, the sale of stocks will eliminate the deficit only temporarily and is unlikely to bring down gasoline prices on the domestic market.
“No emergency situation has been declared, therefore, in order to use the reserve, Biden needs to use special powers. Outside the emergency, he can manage 30 million barrels. This is not much. Even 60 million will reduce oil prices by less than five percent,” said Evgeny Shatov, partner of the investment by Capital Lab.
Goldman Sachs predicts that quotes will rise further in the coming weeks due to disagreements between OPEC + and the United States. According to analysts, there is still a shortage of raw materials. And even if the White House releases strategic reserves, it will not change anything.
At the same time, Washington has no serious leverage over the cartel. They can again threaten with sanctions against specific countries, for example, Russia. A more radical option is to require Congress to pass legislation allowing the federal government to sue OPEC for cartel conspiracy.
“However, this is fraught with a strong diplomatic conflict with the countries of the Middle East, which Washington considers allies, including the United Arab Emirates and Kuwait,” Shatov said.
Apparently, you have to come to terms. OPEC, Russia and other manufacturers refused to obey the demands of the American president, The New York Times stated.
In addition, in contrast to Russia and Saudi Arabia, where production has practically recovered, the situation is different in the United States. There is still less shale than before covid. This means that there are no tools for influencing the aggravating energy crisis.