The Biden administration’s release of 50 million barrels of crude from its strategic reserves in coordination with China, Japan, India, South Korea, and the United Kingdom is not without risk, Bloomberg reported on Tuesday.
That is because this unprecedented, coordinated attempt by the world’s largest oil consumers to control prices could result in a backlash by OPEC, which has warned that they are likely to respond to the move by cancelling plans to increase their own oil production.
This would negate the impact on world markets of the addition of the crude from the U.S. strategic reserves and apparently sets up a struggle for control of the global energy market.
Stephen Nalley, the acting administrator of the U.S. Energy Information Administration, admitted as much when he told a Senate committee last week that "ultimately the amount of impact [on prices of a reserve release] would be relatively short-lived" due to these and other factors, The Wall Street Journal reported.
The stakes are high as politicians and central bankers try to deal with the strongest inflationary surge in more than a decade, of which the price of oil plays a major role.
The power struggle also illustrates the strained ties between the U.S. and Saudi Arabia, which has traditionally been a cornerstone of American relations in the Middle East.
Republican Sen. John Barrasso, who is the ranking member of the Senate Energy Committee, said on Tuesday that President Joe Biden's own policies were the reason the U.S. needed to tap into the strategic reserve in the first place, The Hill reported.
"We are experiencing higher prices because the administration and Democrats in Congress are waging a war on American energy," Barrasso said, adding that "begging OPEC and Russia to increase production and now using the Strategic Petroleum Reserve are desperate attempts to address a Biden-caused disaster. They’re not substitutes for American energy production."
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