U.S. asks China, India and other countries to use oil from their strategic reserves to get back at OPEC

Governments from some of the world’s biggest economies said last week they were planning to release oil from their strategic reserves, following a rare request from the United States for a coordinated move to cool global energy prices and ahead of a meeting of major oil producing countries.

The Biden administration has asked big oil buyers such as India and Japan – as well as China for the first time – to consider releasing stocks of crude, several people familiar with the requests told Reuters on Wednesday. Oil prices fell on the news.

As the world economy rebounds from the pandemic, Washington is frustrated that producers in OPEC+, the Organization of the Petroleum Exporting Countries and allies such as Russia, have rebuffed U.S. requests to speed up oil supplies.

With gasoline prices and other costs rising, U.S. President Joe Biden also faces political pressure ahead of midterm elections next year. A Reuters poll in October showed 67% of U.S. adults agreed that inflation is a very big concern.

OPEC+ plans to meet on December 2 this year. The group has taken a slower approach to boosting output, viewing the economic recovery as too fragile to justify more supply.

Oil prices sank about 4% to a six-week low after Reuters reports about the U.S. request and China’s decision to release some crude, before recovering some ground on Thursday. Oil prices have retreated from recent highs in anticipation that world supply will rise.

The United States has the largest strategic reserve at more than 600 million barrels. The U.S. SPR was set up in the 1970s after the Arab Oil Embargo to ensure the nation had adequate supply to weather an emergency.

It would also mark the first time that China, the world’s No. 2 oil consumer and largest importer, would be involved in a coordinated release with the United States. OPEC expects an oil supply surplus to begin building next month. In September, exports from Saudi Arabia rose to 6.52 million bpd, the highest since January.

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