The USA will offer a total of 50 million barrels of crude oil from the strategic oil reserves, 32 million barrels of which will be phased out.
The United States is trying to create a common move for oil-consuming countries to put their strategic oil reserves up for sale, as part of the fight against high oil prices, which negatively affect its own economy and create global inflationary pressure.
DEMAND INCREASED, OIL PRICE INCREASED
While oil prices were at their highest levels in recent years due to the insufficient supply of oil in the face of increasing demand, it also caused fuel prices to rise in many countries.
Due to the supply bottlenecks caused by the coronavirus epidemic, high energy prices, along with the shortage in the supply of many products, cause inflation to reach historical high levels even in developed countries such as the USA.
COST OF LIVING IN THE USA INCREASED
Recent data in the US show that inflation has reached a 31-year high. The rising cost of living for Americans, from energy to food, raises concerns.
USA CALLS OPEC AND OPEC+ GROUP
The administration of President Joe Biden, which was the target of criticism due to the negative impact of the aforementioned price increases on the US economy, repeatedly called for the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ group, which consists of some non-OPEC producer countries, to increase their production.
COORDINATED SALES PROPOSAL OF THE USA FROM EACH COUNTRY'S OWN STRATEGIC OIL RESERVES WAS APPROVED BY SOME COUNTRIES
Lastly, the Biden administration offered coordinated sales of each country's own strategic oil reserves to major oil-consuming countries. While this demand of the USA was met by China, India, Japan, South Korea and England, uncertainties regarding the duration and amount of the contribution to be made by these countries continue.
According to the statement made by the White House yesterday, the US Department of Energy will release a total of 50 million barrels of crude oil from the strategic oil reserve, 32 million barrels gradually. The Ministry will add 32 million barrels to the reserves in the coming period and ensure that this amount is returned to stocks.
According to the data of the US Energy Information Administration, the country has the world's largest strategic oil reserve capacity with approximately 714 million barrels, and the current reserve amount is approximately 606.1 million barrels as of November 12.
THE AMOUNT CHINA WILL CONTINUE ON THE MARKET IS UNCERTAIN
China, the world's second largest economy and oil consumer, shares similar concerns with the United States about the impact of high oil prices on the country's economy. Although China is involved in the US's joint reserve sale move, it has not yet made a statement about the amount it will release.
JAPAN CAN MAKE RESERVE SALES TILL THE WEEKEND
The world's third largest economy, Japan, has also decided to join the US's joint reserve sale plan. No official statement has yet been made from the country on the amount that can be released to the market. However, Japanese Prime Minister Fumio Kishida pointed out that the said reserve sales could be made by the end of the week.
The Japanese government, which has been holding oil reserves for use in emergencies since the 1970s, has been using private sector reserves in response to the effects of the Gulf War in the early 1990s, the earthquake and tsunami disaster in March 2011, and the oil shortage triggered by the Libyan civil war in June of the same year. It has made a total of five sales of oil reserves, including the sale of oil reserves.
INDIA WILL CONTRIBUTE WITH 5 MILLION BARREL
India, which has approximately 26.5 million barrels of oil reserves, will respond to this call of the USA by offering 5 million barrels of crude oil from strategic oil reserves to the market.
According to the statement made by the Indian Petroleum Ministry yesterday, the said reserve sale will be carried out simultaneously and in consultation with other countries.
1.5 MILLION BARREL CONTRIBUTION FROM ENGLAND
Britain, on the other hand, will make a modest contribution by making 1.5 million barrels of oil available from strategic oil reserves. The reserve sale to be released will be made available to oil companies willing to buy in the coming weeks, the UK government spokesman said yesterday.
Following the said sale, the UK as a member of the IEA will still be able to meet the institution's requirement to hold at least 90 days' net import equivalent of oil as a reserve.
SOUTH KOREA IS PREPARING TO JOIN THE JOINT ACTION
South Korea, which has officially announced that the USA will participate in the joint reserve sale move, will decide the details of the amount and duration of the reserve after consultations with the USA and other countries.
According to the Korean National Petroleum Corporation, the country has oil reserves of approximately 97 million barrels as of August, which can meet its 106-day consumption without importing crude oil.
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