On a busy day for the global oil industry, US President Joe Biden decided to use the huge US oil reserves in an unprecedented way in an attempt to curb the rise in prices in the market, while the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, agreed to abide by the agreement to gradually increase production, refusing to pressure To pump more, the "OPEC Plus" group excluded the International Energy Agency as a source of data, in another indication of a widening dispute with Western countries.

The group has responded to repeated calls from the United States and the Energy Agency for an urgent injection of more crude to calm prices that have risen to near their highest levels ever, on fears of Russian supply disruptions after Washington and the European Union imposed sanctions on Moscow after its invasion of Ukraine.

The “OPEC Plus” alliance adheres to a cautious monthly increase in production, by 400,000 barrels per day, from September 2021 until the end of last April, and also on Thursday, the “OPEC Plus” alliance adjusted the production increase in a limited way to 432,000 barrels per day in May. next May.

American move

For his part, US President Joe Biden announced a significant increase in oil production, and said, "Today I ordered the release of one million barrels per day from the Federal Petroleum Reserve for a period of 6 months." He added, "We do not want oil companies to increase their profits at the expense of the Americans."

"I look forward to seeing how much oil our allies will pull out of their reserves, and I expect it to be between 30 million and 50 million barrels," said Biden, who is facing record inflation undermining his popularity.

He continued, "The scale of this step is unprecedented. The world has never used an oil reserve of one million barrels per day for this period of time. This record use will provide a historical amount of supply to serve as a bridge until the end of the year when domestic production increases."

Planning for this record dumping of the US oil market contributed to reducing prices Thursday in London and New York by about 5%, and this amount of oil, according to a statement issued by the US administration, will be a "transitional measure until (US) production increases at the end of the year."

The US administration will use the proceeds of selling this reserve to replenish the stock "in the coming years".

The White House, which the Republican opposition accuses of harming oil activity in the United States, pledged to "do everything in its power" to encourage extraction on American soil.

Joe Biden, for example, is now asking Congress to impose fines on companies that have the necessary permits and land without using them.

In the context of strengthening the independence of US energy resources, the president will demand the activation of the "Defense Production Act" inherited from the Cold War, which would allow him to make economic decisions by decree to encourage the development of green energies.

The US Strategic Petroleum Reserve was established in 1975 to cope with oil shocks. This reserve, buried in huge salt caves 800 meters deep along the coast of the Gulf of Mexico, is capable of storing 714 million barrels of oil, but it currently contains 568 million barrels.

The US administration has been using this strategic reserve continuously since the fall, when high oil prices took hold. It announced in November that it wanted to use 50 million barrels, and then again 30 million in early March.

Oil producers' disagreements

“OPEC Plus” did not respond to repeated calls from the United States and the Energy Agency to pump more crude to calm prices that increased against the backdrop of the Russian war on Ukraine and its consequences, and Saudi Arabia and the UAE have so far rejected these calls and said that the group should not interfere in politics and its focus should be on Balance the oil market and meet the needs of consumers.

Callum Macpherson of "Investec" said that Saudi Arabia will be keen to avoid conflict with Russia by pumping additional barrels "when Russian production faces difficulties."

OPEC includes 13 oil producing and exporting countries led by Saudi Arabia, while the International Energy Agency includes 31 oil consuming countries, led by the United States.

The global oil supply shortage ranges between 5 and 6 million barrels per day, which ranges between 5% to 6% of global demand, according to Reuters calculations, after sanctions, conflicts and infrastructure problems affected supplies.

OPEC Plus is working to cancel record production cuts in place since 2020 as demand recovers from the Corona virus pandemic, but the group is not increasing production as quickly as the West and other consumers want.

The International Energy Agency meets tomorrow, Friday, to take a decision regarding a collective withdrawal of oil reserves, and Brent crude futures fell 6% to $ 107 a barrel in trading today, Thursday, and “OPEC Plus” had warned of a major blow to the global economy if the conflict in Ukraine protracted.

"Consumer and corporate sentiment is expected to decline, not only in Europe but also in the rest of the world, when it comes to only accounting for the inflationary impact that the conflict has already caused," OPEC Plus said in an internal report seen by Reuters.