[Asia Economy New York=Special Correspondent Joselgina] The Biden administration in the United States announced the largest-ever release of strategic petroleum reserves, causing international oil prices to drop sharply.
On the 31st (local time) at the New York Mercantile Exchange, the May West Texas Intermediate (WTI) crude oil price closed at $100.28 per barrel, down $7.54 (7%) from the previous session. This is the lowest closing price since the 16th of this month.
At 7:55 p.m. local time, May Brent crude on the London ICE Futures Exchange was trading at $107.29, down 5.43% from the previous session.
This followed President Biden's national address announcing plans to release an additional 1 million barrels per day of reserves over the next six months, the largest scale ever.
President Biden cited "the war chosen by Russian President Vladimir Putin (the invasion of Ukraine)" as the cause of the recent sharp rise in oil prices and made clear his commitment to stabilizing prices in the short term. WTI rose more than 30% in the first quarter of this year.
Alongside this, the U.S. administration has requested Congress to impose fines on public lands leased for oil drilling but where no oil is produced. It is estimated that there are 9,000 oil fields that have received production permits but have not yet started operations.
However, the market has raised concerns that the U.S. strategic reserve release alone cannot resolve supply worries. Manish Raj, Chief Financial Officer of Valandera Energy Partners, told MarketWatch, "(The oil price decline) will hold for a while but will not last."
It is also unclear how much the reserve release will affect gasoline prices for consumers. President Biden said it is difficult to comment on the immediate impact of this release but mentioned that gasoline prices could fall by 10 to 35 cents per gallon in the future.
The Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ coalition, which includes Russia and other non-OPEC major oil producers, agreed to increase production by 430,000 barrels per day in May, a slight increase from the previous 400,000 barrels. The Wall Street Journal (WSJ) reported that "the U.S. repeatedly requested a significant increase from OPEC, but it was to no avail."
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