Biden weighs massive release of oil to combat inflation

President Joe Biden is preparing to order the release of up to 1 million barrels of oil per day from the nation's strategic petroleum reserve, in a bid to control energy prices that have spiked as the US and allies have imposed steep sanctions on Russia over its assault of Ukraine.

The announcement could come as soon as Thursday, two people familiar with the decision said on Wednesday. They spoke on the condition of anonymity to preview the decision.

The duration of the release hasn't been finalised but could last for several months, they said.

High oil prices have not coaxed more production, creating a challenge for Biden. The president has seen his popularity sink as inflation reached a 40-year high in February and the cost of petroleum and gasoline climbed after Russia entered Ukraine. 

Oil at nearly $105 a barrel

Crude oil on Wednesday traded at nearly $105 a barrel, up from about $60 a year ago.

Still, oil producers have been more focused on meeting the needs of investors, according to a survey released last week by the Dallas Federal Reserve. About 59 percent of the executives surveyed said investor pressure to preserve "capital discipline amid high prices was the reason they weren't pumping more, while fewer than 10 percent blamed government regulation.

The steady release from the reserves would be a meaningful sum and come near to closing the domestic production gap relative to February 2020, before the coronavirus caused a steep decline in oil output.

The Biden administration in November announced the release of 50 million barrels from the strategic reserve in coordination with other countries. And after the Ukrainian offensive began, the US and 30 other countries agreed to an additional release of 60 million barrels from reserves, with half of the total coming from the US.

According to the Department of Energy, which manages it, more than 568 million barrels of oil were held in the reserve as of March 25.

News of the administration’s planning was first reported by Bloomberg.