US President Biden decides to release Strategic Petroleum Reserves; China, Japan, UK, South Korea and India to do the same

Washington/Dubai: – US President Joe Biden has decided to open the Strategic Petroleum Reserves to bring down the fuel prices in the country. Along with the United States, China, Japan, Great Britain, South Korea and India will also open up some of their reserves. Fuel prices in the international market have been steadily rising for the past year. However, in the absence of matching supplies, fuel prices in many countries have reached record levels.

The White House said in a statement on Tuesday that the United States would release 50 million barrels of fuel from its Strategic Petroleum Reserve. Japan will open 4.2 million barrels, Great Britain 1.5 million and India will release 5 million barrels from reserves. China has already opened up its reserves to reduce diesel prices. China has said it will continue to open up if needed. South Korea has not released figures on fuel stocks.

The US Strategic Petroleum Reserve currently has more than 620 million barrels of fuel reserves. Sources said that considering the daily demand for 2019, the stock could last for more than a month. The current US fuel price is $3.40 per gallon (3.78541 litres). Last year, the same rate was $2.11 per gallon. The increase of 60% over just one year has been a headache for the Biden administration. Therefore, this decision to open reserves has been taken.

However, the decision has been criticised on the international level, including from within the United States. On the one hand, the Biden administration has banned fuel extraction in the United States, in pursuance of its environmental plan and, on the other, has opened up reserves. Republican lawmakers say this will achieve nothing. Goldman Sachs, a financial institution, has retorted that opening of the reserves by the Biden administration is like a drop in the ocean. Ministers in the United Arab Emirates, a fuel producing country, have said Biden’s decision should not be ignored. The Organisation of the Petroleum Exporting Countries (OPEC) has also warned that their decision is unlikely to change.

In the last few months, the global economy has been showing signs of recovery post-Corona pandemic. Therefore, the demand for fuel has started increasing. At the same time, lower levels of coal, natural gas and crude oil production have led to higher prices. In July, a meeting of the OPEC and OPEC Plus groups of fuel-producing countries had signed an agreement to increase fuel supplies.

Under the agreement, crude oil production has been increased by four hundred thousand barrels per day from August. However, the rates started increasing as the demand for crude oil increased rapidly and the supply was limited. In August, the Biden administration in the United States instructed the OPEC group of fuel-producing countries to increase production. But OPEC rejected the US offer and decided to stick to its agreement. Against this backdrop, some analysts have claimed that the Biden administration’s decision to open up its reserves could be an attempt to send a message to OPEC.