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1.5mn barrels from privately held reserves. of the extra supply released onto the market
The Japanese government said on Novem- would be temporary, simply “shifting the timing
ber 24 that it would release several million of the market dynamics further down the road”.
barrels, though it did not specify volumes, The consultancy added that it had already
and South Korea also said it would partic- anticipated the market tipping into surplus in
ipate in the joint release without providing February 2022, and that the US-led release could
specific numbers. bring this forward to December.
Consultancy Rystad Energy has estimated “The release may be a case of too much, too
that a combined 71.5mn barrels could be late, as the oil market was tightest and needed
released by all the countries jointly. Meanwhile, supply relief in September,” Rystad’s senior oil
investment bank Goldman Sachs estimated markets analyst, Louise Dickson, wrote in a mar-
crude reserve releases from South Korea, Japan, ket comment.
China, India and the UK totalling up to 30mn In addition, the Wall Street Journal reported
barrels, which would bring the total, including on November 24 that certain members of
US volumes, to up to 80mn barrels. OPEC+, including Russia and Saudi Arabia,
This is the first time the US has co-ordinated are considering pausing their gradual supply
such a move with some of the world’s largest scale-up. Citing sources familiar with the mat-
consumers of crude. (See NorthAmOil Week ter, the newspaper said that other members of
46) It puts pressure on OPEC+ to deviate from the group are not convinced that a pause is nec-
its chosen strategy and threatens to upset oil essary. But Rystad also pointed to heightened
geopolitics. expectations in the market that OPEC+ could
move to counteract the SPR release.
Impact questions “The bold move from the oil importers has
However, the impact of the co-ordinated release opened the door wide open for OPEC+ to adjust
on the oil market has been questioned, and its supply policy downwards at its next Decem-
Argus Media suggested that markets had been ber 2, 2021 [meeting],” Rystad said.
anticipating a larger release. Rystad, meanwhile, The consultancy anticipates that spot price
said that if the plans translated into an average premiums are what may be most affected by
supply addition of 1.2mn bpd over a two-month additional oil volumes being released onto the
period starting in mid-December, that would be market. But it noted that both deferred prices
“not immaterial” in a market of 80mn bpd. How- and the price level in the market itself also
ever, it added that with the US swapping 32mn depend on what approach OPEC+ takes at its
barrels rather than selling them outright, much next meeting.™

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