Oil prices are falling as Vice President Joe Biden considers releasing reserves

Image credit: Bloomberg.com

Oil prices have plummeted on news that the US may take further initiatives to reduce high gasoline expenses.

According to reports, the Biden administration is considering releasing up to 180 million barrels of oil from the Strategic Petroleum Reserve in the coming months.

If confirmed, this will be the reserve’s greatest release since its inception in 1974.

As a result of the fighting in Ukraine, fears of supply interruptions have rattled global energy markets in recent weeks.

In Asian afternoon trade, West Texas Intermediate was down 5.4 per cent at $102 a barrel, while Brent Crude was down 4.6 per cent at approximately $108.

In the run-up to the November mid-term elections in the United States, the growing cost of gasoline has become a major political issue.

The announcement of a possible large oil release by the United States came as the Organization of Petroleum Exporting Countries (Opec) and its allies, including Russia, were set to meet on Thursday.

Opec+, the group of major oil-producing nations, is anticipated to continue with its existing agreement to gradually boost output.

Oil prices have risen in recent weeks, with Brent crude surpassing $139 a barrel earlier this month following Russia’s invasion of Ukraine and US-led sanctions against Moscow.

Although energy prices have dropped since then, Brent Crude is still about 70% higher than it was a year ago.

Expectations that Russian oil exports could drop by as much as 3 million barrels per day have exacerbated the situation in recent weeks.

After Saudi Arabia, Russia is the world’s second-largest oil exporter.

The United States, the world’s greatest oil producer, is now producing 11.7 million barrels per day, but this is insufficient to meet global demand.

Meanwhile, an emergency meeting of the International Energy Agency has been scheduled for Friday.

It’s uncertain whether other IEA members, including the United Kingdom, France, Germany, and Japan, will follow the United States in releasing oil reserves.

On Thursday, Japan announced that, as a result of the war and sanctions, it would take emergency measures to secure supplies of seven vital minerals it mainly relies on from Russia or Ukraine.