Oil: unprecedented offensive by the United States and other countries, including China, to lower prices – archyde

In an alliance of unprecedented circumstance, the United States and other countries, including China, will use their strategic oil reserves to try to lower the price of black gold, the White House announced on Tuesday.

This decision comes at a time when prices at the pump have soared in the United States, very large consumers of gasoline; a major political problem for President Joe Biden, especially on the eve of Thanksgiving, when Americans hit the road to join their families.

The world’s leading economic power will market 50 million barrels of oil, according to a press release.

By increasing the supply, the United States and the other States hope to automatically lower prices, while putting pressure on the producing countries.

Crude has soared against the backdrop of a rebound in the economy and travel after restrictions linked to the Covid-19 pandemic were lifted.

The impact of such an operation is also, and perhaps above all, psychological: the prices of black gold had already started to fall in recent days, while speculations were multiplying on such a coordinated action.

So much so that on Tuesday, the market barely reacted: around 1:00 p.m. GMT, prices showed a slight decline of 0.39% compared to their close the day before for a barrel of West Texas Intermediate (WTI), a standard American variety. .

In about three months, between August 19 and November 22, WTI had risen 20.5%.

For the occasion, Washington and Beijing have put their rivalry aside: China is one of the big black gold consumers to join this initiative, just like India, Japan, South Korea or again the UK, according to the White House.

A senior official in the US administration assured that such coordination was a first.

– Consumer cartel –

Attempts by the United States to pressure producing countries, especially Saudi Arabia, to increase their supply have so far failed.

Louise Dickson, analyst at Rystad Energy, also explains that “this historic and unorthodox action is clearly a message telling OPEC”, the cartel of the major producing countries including Russia, “that it is not the only player in the oil market. ”

“This coordinated effort forms an informal alliance on the side of consumer countries,” in response to the cartel of producer countries, she said.

The American president also has in his sights the large companies of the sector, accused of passing on to the pump only the price increases, while raking in huge profits.

The White House asked the US competition authority a few days ago to look “immediately” into the “possibly illegal” behavior of oil companies, and does not rule out legal action.

In detail, the United States will use its oil reserves in two ways.

They will market 32 ​​million barrels through an “exchange” system: this oil will be returned to the federal government and returned to strategic reserves over the coming years.

18 million barrels will be sold outright, over a period of several months.

The United States is storing its strategic oil reserves at four underground sites in Louisiana and Texas, which contain 714 million barrels, according to a score at the end of August from the Department of Energy.

It is relatively rare for them to draw large quantities from them, except in an emergency. This may be the case when hurricanes hit the Gulf of Mexico, a region critical for oil production and storage, or in response to international crises.

This was the case, for example, in 2011, to cope with the interruption of oil production in Libya, which is in the grip of civil war.

aue / iba