The efforts of the Biden administration to reduce global commodity prices could go in vain as the United States risks losing its cushion reserved for oil shocks, The Wall Street Journal reported.
In September, the Strategic Petroleum Reserve (SPR) in the United States decreased by 7 million to 427 million barrels, the lowest since 1984, according to the Energy Information Administration (EIA).
In 2022, the United States has been depleting its SPR rapidly. On Monday, September 26, the Energy Department said it would sell 155 million barrels of crude oil from the Reserve, as part of the president's historic release announced on March 31 to help bring down prices. Back then, Joseph Biden authorized the Energy Department to sell up to 180 million barrels of crude oil to reduce prices and boost supply.
In this light, the daily volume of crude released by the US government totaled 900,000 barrels per day, which offsets 1% of global demand, experts estimated. As the GasBuddy data shows, fuel prices in the country have dropped to $3.66 a gallon over the past three months. In mid-June, the price of one gallon reached $5.03.
Biden’s historic reserve release is believed to be successful only in the short term. According to The Wall Street Journal, this measure is unlikely to enhance US energy security. The US SPR is depleted, which means the country will have fewer options in case of supply disruptions, as the risks of a supply squeeze are still high.
Moreover, a decrease in crude exports from Russia is weighing on global oil flows. Additional restrictions will come into effect with the EU embargo on December 5, 2022. Above all else, there are risks that OPEC+ would cut production if global oil prices fall and the situation in the world generally gets worse.