The administration of U.S. President Donald Trump announced on Thursday that it plans to loan energy companies up to 92.5 million barrels of crude oil from the Strategic Petroleum Reserve, as part of an international effort to calm oil markets experiencing sharp price increases due to the Iran war.
This amount is part of a total 172 million barrels that the United States approved for release in March under a broader agreement with more than 30 countries in the International Energy Agency to release nearly 400 million barrels.
Fatih Birol, Executive Director of the International Energy Agency, stated that the war has led to the largest energy crisis in history.
So far, the United States has offered 126 million barrels of crude oil across three rounds, but oil companies have borrowed less than 80 million barrels, or about 63% of the offered volume.
If companies take the full amount offered, it would meet the U.S. target of releasing 172 million barrels. The deadline for applications is May 4.
High oil prices pose a risk to Trump’s fellow Republicans in the upcoming midterm congressional elections in November.
The average gasoline price in the United States reached $4.30 per gallon on Thursday—the highest level since July 2002—according to data from the American Automobile Association.
Crude oil prices—the key input for gasoline, jet fuel, and diesel—have continued to rise despite the reserve drawdowns. Global oil prices briefly exceeded $126 per barrel on Thursday, reaching their highest level in four years amid fears that the war could prolong disruptions to Middle East supply.
The administration is releasing oil from the reserve in the form of loans, which companies must repay with additional barrels as a premium. The U.S. Department of Energy says this system will help stabilize markets “at no cost to U.S. taxpayers.”
The Strategic Petroleum Reserve currently holds about 398 million barrels, roughly equivalent to four days of global consumption. It is stored in a network of underground caverns across four sites along the coasts of Texas and Louisiana.
Reuters
