Biden Releasing 10 Million More Barrels of Oil From US Strategic Petroleum Reserve After OPEC+ Cut

President Joe Biden speaks in the Roosevelt Room of the White House on March 8, 2022. (Win McNamee/Getty Images)

President Joe Biden’s administration will release 10 million more barrels of oil from the U.S. Strategic Petroleum Reserve following an Oct. 5 OPEC+ announcement that the cartel will slash oil production.

That decision was announced hours after the Organization of the Petroleum Exporting Countries Plus (OPEC+) confirmed it would cut oil production by 2 million barrels per day. The cut marks a setback for Biden, who visited Saudi Arabia in July to push the kingdom into increasing production amid historically high U.S. gas prices.

Cuts to production are expected to drive the price of a barrel of oil—and gas prices—worldwide, including in the United States. OPEC+’s production cuts are based on existing baseline figures, which means the cuts would be less deep because OPEC+ fell about 3.6 million barrels per day short of its output target in August.

Release

Starting in March, the Biden administration said it would start releasing oil from the Strategic Petroleum Reserve, an institution that was set up in the 1970s amid oil embargos, in a bid to keep gas prices low. The release of some 180 million barrels of oil from the U.S. petroleum reserves this year is expected to end by Oct. 31.

But in the Oct. 5 announcement from the White House, that plan appears to have been scrapped. National security adviser Jake Sullivan and National Economic Council Director Brian Deese said in the statement that, per a directive from Biden, the “Department of Energy will deliver another 10 million barrels from the Strategic Petroleum Reserve to the market next month.”

“The President will continue to direct [Strategic Petroleum Reserve] releases as appropriate to protect American consumers and promote energy security,” they stated. “He is directing the Secretary of Energy to explore any additional responsible actions to continue increasing domestic production in the immediate term.”

The administration once again targeted U.S. oil and energy companies and accused them of fostering a “historically large gap between wholesale and retail gas prices,” according to the White House statement. When the average price for a gallon of gasoline rose to around $5 earlier this year, Biden sent a letter to the heads of ExxonMobil, Chevron, BP, and other top oil firms warning them that if they don’t increase production, he will take executive action.

The Bryan Mound Strategic Petroleum Reserve, an oil storage facility, is seen in this aerial photograph over Freeport, Texas, on April 27, 2020. (Adrees Latif/Reuters)

Their statement also said that lower- and middle-income nations will be hardest hit by OPEC+’s decision and claimed that the move was being done to protect member Russia and its leadership. Speaking to reporters ahead of the OPEC+’s meeting in Vienna, United Arab Emirates energy minister Subail al-Mazroui said the Oct. 5 decision is based on technical considerations.

“The decision is technical, not political. We will not use it [OPEC+] as a political organization,” al-Mazroui said.

Underproduction happened because of Western sanctions on countries such as Russia, Venezuela, and Iran and output problems with producers such as Nigeria and Angola. Saudi energy minister Abdulaziz bin Salman Al Saud said the real cuts would be 1.0 million to 1.1 million barrels per day.

Analysts from Jefferies said they estimated the figure at 0.9 million barrels per day, while Goldman Sachs put it at 0.4 million to 0.6 million barrels per day saying cuts would mainly come from Gulf OPEC producers such as Saudi Arabia, Iraq, the United Arab Emirates, and Kuwait.

Approval

Biden faces low approval ratings ahead of midterm elections due to soaring inflation and has called on Saudi Arabia, a long-term U.S. ally, to help lower prices. Other U.S. officials have said part of the reason Washington wants lower oil prices is to deprive Moscow of oil revenue.

Gas prices are advertised at a Chevron station as rising inflation and oil costs affect the consumers in Los Angeles, Calif., on June 13, 2022. (Lucy Nicholson/Reuters)

When Biden traveled to Riyadh this year, he failed to secure any firm cooperation commitments on energy. Relations have been further strained as Saudi Arabia hasn’t condemned Moscow’s actions in Ukraine.

Russian Deputy Prime Minister Alexander Novak, who was put on the U.S. special designated nationals sanctions list last week, traveled to Vienna to participate in OPEC+’s meetings.

The Strategic Petroleum Reserve in late September plunged to around 422.58 million barrels of oil—the lowest level since 1984. That’s down from approximately 617 million barrels as of Oct. 1, 2021.

“This is the first time in history, honestly, that the Strategic Petroleum Reserve has been used as a campaign credit card to buy down political risk for the midterms,” Tim Stewart, head of the U.S. Oil and Gas Association, told Just the News regarding the historic release of oil from the reserve.

Reuters contributed to this report.