When President Biden declared earlier this week that the federal government would release 50 million barrels of crude from the strategic petroleum reserve, it’s possible that some around him expected prices to plummet. Instead, prices climbed, and OPEC+ hinted that supply would be slashed. Oil prices had dropped considerably by Friday, but this was due to a new round of Covid-19 worries, not Biden declaration that oil would be released from emergency reserves. But what happens next might push oil to $100 a barrel.
SPR may not have the expected effect, according to energy researchers. They indicated that no matter how many barrels the United States or its Asian partners, as well as the United Kingdom, release, OPEC might withhold more and for a longer period of time. They explained that the SPR crude is sour, which refiners dislike because it requires additional processing to decrease the sulphur level, which necessitates the use of natural gas, which is now expensive.
If WTI falls below $70, I expect a response from OPEC+.” For starters, there is no guarantee that the oil loans will be fully utilised. For seconds, 18 million barrels divided by a few months equals less than 1 million barrels every day. Meanwhile, OPEC is bracing for the worst-case scenario, which would see 66 million barrels released in January and February.