Due to high prices for fuel and other consumer goods in the midst of the coronavirus outbreak, US President Joe Biden has low approval ratings.
According to a Biden administration source familiar with the matter, the US is set to declare a loan of crude oil from its crisis reserve on Tuesday as part of a plan to thrash out with big Asian energy consumers to cut energy costs.
The initiative aims to bring down rising energy costs after OPEC and its allies turned down repeated demands from Washington and other consumption countries to pump more swiftly to keep up with surging demand.
Due to rising prices for fuel and other consumer goods in the midst of the coronavirus outbreak, US President Joe Biden’s approval ratings are poor, posing a threat to him and his Democratic party ahead of next year’s congressional elections.
A “swap” from the US Strategic Petroleum Reserve (SPR) will be disclosed on Tuesday, according to the source, in a move coordinated with numerous countries. The amount of oil that would be released from the stocks was not specified by the source.
Biden has already requested that China, India, South Korea, and Japan release strategic oil supplies alongside the US. According to Reuters, Japanese and Indian officials are working on ways to accomplish this.
The extraordinary effort by the United States to work with big Asian economies to cut energy prices is meant to serve as a reminder to major producers that they should pump more oil to satisfy concerns about high gasoline prices in the world’s most powerful economies.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, which include Russia, will meet on December 2 to discuss output policy.
When global supply issues demand a coordinated release of inventories, the US has traditionally collaborated with the International Energy Agency (IEA), a bloc of 30 industrialized energy-consuming nations centered in Paris.
China and India are just associate members of the IEA, but Japan and South Korea are full members.
Oil companies are required to remove crude oil from stocks and return it – or the refined product – plus interest under an SPR swap. When oil firms suffer a supply disruption, such as a pipeline outage or hurricane damage, swaps are commonly offered.
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