"Impact of Russian Sanctions on Oil Prices" US to Release 1 Million Barrels of Strategic Reserves Daily for 6 Months

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The Biden administration in the United States will release 1 million barrels of reserve oil per day for the next six months to curb the rising oil prices caused by the ban on Russian crude oil imports. It also plans to impose fines on lands that lease public drilling sites but do not produce oil.

On the 31st of last month (local time), the White House announced in a press release that it will release an additional 1 million barrels per day of reserve oil, the largest scale ever, over the next six months to stabilize oil prices in the short term. Accordingly, up to 180 million barrels of reserve oil will be released over six months.

The White House explained the background of the reserve oil release decision, stating, "Russian President Vladimir Putin chose war, reducing the oil supplied to the market. The production decrease is driving up oil prices." It also emphasized, "This kind of release is unprecedented and will serve as a bridge until oil production expands by the end of the year."

President Biden said it is difficult to comment on the immediate impact of this release but predicted that gasoline prices could drop by about 10 to 35 cents per gallon in the future.

Along with this, the Biden administration will request Congress to impose fines on lands that lease public sites for oil drilling but do not produce oil. It is estimated that there are 9,000 oil fields that have received production permits but have not yet started production.

The White House warned, "Too many companies are choosing not to do their jobs and are making abnormal profits," adding, "Companies that are sitting on land without producing must decide whether to produce or pay fines."

Furthermore, to increase the production of essential minerals needed for manufacturing electric vehicle batteries, the administration decided to apply the Defense Production Act (DPA), which was created during the Korean War. The targets are companies producing minerals such as lithium, nickel, cobalt, and manganese, which are necessary for large-capacity battery production.

The DPA is a law that allows the president to prioritize procurement of goods deemed necessary for national security regardless of whether the producing companies incur losses. It was created in 1950, shortly after the outbreak of the Korean War, to encourage steel production needed for the Korean War response.