Biden administration weighs massive draw from emergency oil reserve – sources

Reuters file photo
Models of oil barrels and a pump jack are displayed in front of a rising stock graph taken on February 24.

WASHINGTON (Reuters) – The Biden administration is considering releasing 1 million barrels of oil a day for several months from the Strategic Petroleum Reserve (SPR), three U.S. sources said, as the White House tries to control gasoline prices.

President Joe Biden deliver remarks on Thursday on his administration’s actions, the White House said, as Russia’s invasion of Ukraine and sanctions on Moscow have driven up the price of oil.

Russia is typically one of the world’s top producers of oil, contributing about 10% to the global market. But sanctions and buyer’s reluctance will remove about 3 million barrels per day (bpd) of Russian oil from the market starting in April, the International Energy Agency has said.

The sources did not say how long a 1 million bpd draw from strategic reserves being weighed would continue.

On Friday, a U.S. source said the Biden administration was considering another release of oil from the SPR to help stabilize global energy markets that, if carried out, could be bigger than the sale of 30 million barrels earlier this month.

High gasoline prices are a political liability for Biden and his Democratic Party as they seek to retain control of Congress in November elections.

U.S. crude futures fell $4.36 to $103.346 a barrel and Brent futures fell by $4.36, or 3.84%, to $109.09 a barrel on news of the potential release.

The White House said Biden will deliver remarks at 1:30 p.m. ET (1730 GMT) on “his administration’s actions to reduce the impact of Putin’s price hike on energy prices and lower gas prices at the pump for American families.” It did not give additional details.

International Energy Agency member states agreed to release over 60 million barrels of oil reserves earlier in March, with 30 million barrels coming from the U.S. SPR.

The Biden administration is considering temporarily removing restrictions on summer sales of higher-ethanol gasoline blends as a way to lower fuel costs for U.S. consumers, three sources familiar with the matter told Reuters.

Adding more ethanol to gasoline blends could potentially reduce prices at U.S. gas pumps because ethanol, which is made from corn, is currently cheaper than straight gasoline. (Reporting by Eric Beech, Jarrett Renshaw, Steve Holland and Timothy Gardner; Editing by Muralikumar Anantharaman, Grant McCool and Himani Sarkar)