U.S. President Joe Biden’s administration is weighing the need for further releases of crude oil from the nation’s emergency stockpiles after the current program ends in October, Energy Secretary Jennifer Granholm told Reuters on Thursday.
The Biden administration this year has dispatched about 1 million barrels of oil per day from Strategic Petroleum Reserve (SPR) stockpiles to lower fuel prices and pare energy inflation ahead of midterm elections in November.
The releases have helped knock average U.S. retail gasoline prices down to from $3.75 a gallon this week from $5 a gallon in June. But they also have cut U.S. emergency stocks to below 450 million barrels, the lowest level since 1984.
Without the SPR releases, U.S. crude oil inventories “would be much lower than they are and they are already below average,” said Phil Flynn, an analyst at Price Futures Group.
OPEC and its allies led by Russia on Monday agreed to a small oil production cut beginning next month to bolster prices that have slid on fears of an economic slowdown.
Still, it is “a little early to say to say that there is going to be more SPR releases,” said Abhiram Rajendran, head of global oil at Energy Intelligence. “But if OPEC starts getting aggressive on cutting supply, that’s a possibility.”
The nation’s overall crude stocks have been declining since mid-2020 due to sales from congressional mandates and Biden’s price initiative.
Granholm also said during a visit to Houston on Thursday that the administration and allies are still discussing a cap on prices for Russian oil purchases. A price cap would restrict revenues available to Russia amid its invasion of Ukraine.
The administration has not ruled out a U.S. fuel export ban, but said it is “certainly not something on top of the list,” she said. Granholm wrote to U.S. refiners urging them to replenish low U.S. fuel inventories ahead of winter and to curb rising exports of gasoline and diesel. The letter warned the Biden administration may take unspecified emergency measures if fuel stocks fell further.
(Reporting by Arathy Somasekhar; editing by Deepa Babington and Marguerita Choy)