U.S considering massive oil draw to counter rising oil prices, inflation

Mar 31, 2022: According to a report by Reuters, the U.S is considering a massive release of oil reserves to counter rising oil prices which are fuelling inflationary fears around the world.

Western sanctions imposed on Russia as punishment for its invasion have largely isolated its economy from world trade but Moscow is still the biggest supplier of oil and gas to Europe and the war has seen global oil prices spike.

Seeking to exert its leverage, Russia demanded oil and gas payments be made in roubles by Friday, raising fears of energy shortages and boosting recessionary risks in Europe.

Germany has warned of a possible emergency if Russia cuts supplies. Floating a potential compromise, Russian President Vladimir Putin told German Chancellor Olaf Scholz that payments could be made in euros and sent to Gazprombank, which would convert the money to roubles, a German government spokesperson said.

Scholz asked for written information to “better understand the procedure,” the spokesperson said. Gazprombank, one of the main channels for payments for Russian oil and gas, is not subject to EU sanctions.

The United States, the world’s largest crude producer, is considering releasing up to 180 million barrels of oil over several months from its Strategic Petroleum Reserves (SPR) to ease upward pressure on prices, two US sources said.

Oil prices dived more than $5 a barrel on Thursday after the news.

The move would mark the third time the United States has tapped its strategic reserves in the past six months, and would be the largest release in the near 50-year history of the SPR.

US President Joe Biden will give remarks later on Thursday on efforts to lower gas prices, the White House said.

A spokesman for New Zealand’s energy minister said on Thursday that member countries of the International Energy Agency (IEA) would hold an emergency meeting on Friday at 1200 GMT to decide on a collective release of oil.

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