The U.S. stockpile, stored in underground caverns in Texas and Louisiana, was established after the 1973-74 oil embargo by Arab members of the Organization of the Petroleum Exporting Countries, and has only been tapped in this manner in emergencies like the buildup to the Persian Gulf war in 1991 and the aftermath of Hurricane Katrina in 2005, when much of the Gulf of Mexico oil infrastructure was damaged. The reserve is also used to exchange or lend oil to refineries when accidents or storms block shipping channels.
Biden administration officials said the move announced on Tuesday would not be an emergency release. It will rather come in two parts: a loan of 32 million barrels over several months to refineries and the accelerated sale of 18 million barrels, which has already been congressionally authorized.
Britain will be voluntarily allowing companies to release their oil reserves. If every company takes advantage of the option, it would amount to the release of 1.5 million barrels of oil, a British government representative said.
A coordinated release would probably be considered a challenge by members of OPEC Plus, and could prompt a response next week when the group holds its next monthly meeting.
In recent monthly meetings, the group has stuck with plans to increase production by a relatively modest 400,000 barrels a day each month. Asked about a potential response from OPEC Plus, U.S. officials said on Tuesday that the administration had worked for weeks to rally other oil-producing countries to agree to tap into their stockpiles to ensure a parallel release, which was a preference of Mr. Biden’s.
At its last meeting, on Nov. 4, the group said it was committed to ensuring “a stable and balanced oil market,” and that bigger increases could exceed demand as economies struggled to emerge from the pandemic, as supply-chain disruptions cause slowdowns and surges in coronavirus cases fill hospitals in some regions.
On Monday, an official of the International Energy Forum, an organization based in Riyadh, said he expected that OPEC Plus would continue with its current plans to raise production each month by 400,000 barrels a day.