Oil prices have received a shock from news of the Biden administration’s plans to begin buying crude to replenish the Strategic Petroleum Reserve.
The US Department of Energy said on Friday it would begin buying back oil to bolster the Strategic Petroleum Reserve, in the first purchase since the release record from questyear of 180 million barrels of storage.
The US government will begin restocking the world’s largest stockpile of emergency oil after depleting it for months, saying it is moving to boost the country’s energy security and give domestic crude producers ‘guarantees’ to drill more wells .
A senior official told reporters the ministry would buy up to 3 million barrels for delivery in February.
The decision to buy crude again to replenish the Strategic Petroleum Reserve follows the decline in oil prices in recent weeks. It’s a reflection of the Joe Biden administration, which has been selling off reserves in a bid to cut fuel costs and ease fears of a global energy shortage stemming from Russia’s war in Ukraine.
Over the past week, the Strategic Petroleum Reserve held just over 382 million barrels, the lowest level since the mid-1980s, according to the US Energy Information Administration.
In parallel with the Biden administration’s plans, oil prices have seen losses. WTI was trading near $75 a barrel, after falling to $73.
Brent crude futures closed in down $2.17, or 2.67%, to settle at $79.04 a barrel. U.S. oil futures fell $1.82, or 2.39%, to settle at $74.29 a barrel.
Markets remain under pressure on fears that central banks’ determination to continue their fight against inflation will push economies in recession.
Oil had a tough end to the year as sluggish markets and limited supply disruption from Russia weighed on prices. While the outlook has improved in recent days as US inflation numbers slow and China appears poised to reopen its economy, central banks have taken an aggressive tone on key interest rate decisions this week.
Read More About: Business News