Biden administration hints at releasing oil strategic reserves

Democratic senators call on US President to reimpose ban on crude oil exports

Brent crude oil futures returned above $84 per barrel on Tuesday, as the market reacted to the United States government lifting its Covid-era travel ban on international visitors. 

Almost 21 months after the first restrictions on international travel, fully vaccinated tourists will be able to visit the world’s largest economy, bolstering travel stocks and increasing fuel demand forecasts. 

This latter factor may cause further headaches for the Biden administration which continues to walk the tightrope between promoting the transition to more sustainable forms of energy and preventing runaway fuel costs for US citizens. 

Toward the end of last week, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) resisted the White House’s repeated calls for an acceleration in its planned easing of production limits. 

Jennifer Granholm

Following the meeting, US Energy Secretary Jennifer Granholm was asked by Bloomberg host Tom Keene how she might reduce rising fuel costs and “increase oil production in America”. 

In response, Granhomd laughed and said: “That is hilarious. Would that I had the magic wand on this. As you know, of course, oil is a global market. It is controlled by a cartel. That cartel is called OPEC”. 

Three days later however, the Energy Secretary, having been criticised for laughing about the issue, hinted at what a possible plan might look like. 

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Speaking to MSNBC, Granholm said: “He's (Biden) certainly looking at what options he has in the limited range of tools a president might have to address the cost of gasoline at the pump, because it is a global market. Hopefully there will be an announcement or so this week.”

Senators call on Biden to act

In a further indication of a possible tapping of US reserves, leading Democratic senators wrote a letter to President Biden on Tuesday urging him to “consider all tools available at your disposal to lower US gasoline prices.”

The signatories, who blamed OPEC+ for rising prices, added: “This includes a release from the Strategic Petroleum Reserve and a ban on crude oil exports.”

By 17:30 (GMT), Brent and US crude spot traded up by 0.6% and 0.9% at $83.79 and $82.31 per barrel, respectively.

Further reading: The Fed stresses dangers of risky assets and stablecoins

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