Page 4 - NorthAmOil Week 46 2021

NorthAmOil COMMENTARY NorthAmOil

US seeks Asian allies

for SPR strategy

The US wants to co-ordinate with major Asian crude

buyers to oversee the release of strategic reserves

in order to bring prices down

GLOBAL THE US has responded to OPEC+’s refusal
earlier this month to up its scheduled produc-
WHAT: tion increases by calling on China, Japan, South
The US has called on Korea and India and to release their strategic
China, Japan, South Korea petroleum reserves (SPRs) in order to help cool
and India and to tap their international oil prices.
SPRs. US President Joe Biden is under pressure
from Congress to tap into the country’s oil
WHY: reserves to ease some of the economic pressure
Washington is worried caused by the oil price recovery.
about the economic Washington’s request of Asian buyers to join
impact of high oil prices. it, however, is expected to send a clear mes-
sage to OPEC+ that consumer countries are
WHAT NEXT: no longer willing to accept runaway oil prices,
The US may struggle Reuters quoted unnamed sources as saying on
to gain traction in Asia November 17.
and OPEC+ may ignore “We’re talking about the symbolism of the
pressure regardless. largest consumers of the world sending a mes-
sage to OPEC that ‘you’ve got to change your
behaviour’,” one source said. US President Joe Biden
The international Brent benchmark has barrels per day (bpd), despite consumer coun- is under pressure from
retreated from the around $85 per barrel mark tries’ warnings that high oil prices were threat- Congress to tap into the
over the past week, slipping below $80. The con- ening their economic recovery. country’s oil reserves.
traction was driven both by the reports of Wash- Defending the decision to stick with the pro-
ington’s desire to release oil, China’s decision to duction plan, Russian Energy Minister Alex-
actually tap its SPR and growing concerns about ander Novak told reporters: “The decision was
a fresh surge in coronavirus (COVID-19) cases made previously to increase production by
in Europe. 400,000 bpd every month, and I underscore
Despite China’s move to sell off some of its every month, until the end of 2022. Today the
crude reserves, the second time this year it has decision was reiterated to maintain current
done so, it is not clear whether other consumer parameters which were decided on earlier.”
countries will do likewise. Novak said the organisation had delivered an
additional 2mn bpd of production after the plan
On the defensive had been implemented, while also warning that
The Biden administration has mulled over the OPEC+ anticipated a “seasonal drop in demand
possibility of a co-ordinated stockpile release in the fourth and first quarters of the year. He
with Japan, South Korea, India and China for added that European oil product demand had
a number of weeks, Reuters’ sources said this also shown signs of a contraction in October.
week. The minister said this “basically underscores
The US was frustrated after OPEC+ agreed at the fact that global oil demand is still under
the start of the month to stay the course with pressure from the delta COVID variant, and
its current production plan, resisting pressure due to the preservation of various limitations
to scale up output. and COVID measures in some countries.”
The organisation agreed on November 4
to implement its August production plan in Traction issues
December and increase output by 400,000 Although the US is now pushing for Asia’s

P4 www. NEWSBASE .com Week 46 18•November•2021