President Joe Biden is close to announcing another big release of oil from emergency stocks in the US as he steps up efforts to cool crude prices that are feeding in to high inflation across the economy, three people familiar with the plan said.
The move by the White House is expected on Thursday and would mark the third oil release it has announced since November, and potentially the largest.
The news immediately hit oil prices, which fell more than 4 per cent.
One person familiar with the plan said the final details were still being ironed out but the release from the US strategic petroleum reserve was expected to last several months and amount to as much as 1mn barrels per day of oil.
At 1.30pm on Thursday, Biden is due to speak on “his administration’s actions to reduce the impact of [Vladimir] Putin’s price hike on energy prices and lower gas prices at the pump for American families”, according to the White House schedule.
Since Moscow’s invasion of Ukraine, the US president has increasingly blamed Russia’s president, for high inflation, which is hurting his approval ratings and damaging the Democratic party’s chances of retaining control of Congress in the midterm elections.
The White House move also comes as western countries have stepped up sanctions against Russia, the world’s largest petroleum exporter, including a ban by the US on Russian oil imports in the wake of the invasion of Ukraine.
The International Energy Agency, a watchdog for western consumer countries, said this month that sanctions on Russia and shippers’ reluctance to load Russian crude could cut the country’s output by up to 3mn barrels a day, or about 3 per cent of the world’s total, by April.
“It would not be surprising for the administration to extend the [earlier stock releases] given the large Russian oil supply disruption risk is not going away,” said Bob McNally, who advised former president George W Bush and now heads consultancy Rapidan Energy Group.
Oil prices have surged since Putin ordered the invasion of Ukraine, with international benchmark Brent hitting 14-year highs this month.
Crude prices sank on expectations of the SPR announcement, with Brent down more than 4 per cent to less than $109 a barrel and West Texas Intermediate, the US benchmark, falling by a similar percentage to just over $103 a barrel.
Oil prices have almost doubled in the past year, while average petrol prices are up almost 50 per cent and hit records in recent weeks.
The US has also urged Saudi Arabia and other big Opec oil producers to increase the pace of supply increases, but the cartel has resisted pressure to do so. The producer group will meet on Thursday to decide its output policy.
The SPR is a government-maintained emergency storage complex consisting of four underground sites in salt domes close along the US Gulf Coast. It currently holds 568mn barrels of crude oil, according to the federal Energy Information Administration.
Biden announced a release from the SPR in November, and last month the US joined other members of the IEA in a co-ordinated global release.
Previous large stock releases have occurred after supply disruptions such as Hurricane Katrina in 2005 and the Libyan civil war in 2011.
The Department of Energy declined to comment.
Additional reporting by Myles McCormick in New York
Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forward-thinking analysis and insider intelligence. Sign up here.