The total size of the SPR in the United States is over 700 million barrels.
The current action will expedite the planned sale of these barrels, which should now be complete by December 6. An additional 32 million barrels will release as part of an exchange scheme. Companies can buy barrels from the SPR in exchange for a commitment to replenish the strategic reserve with comparable barrels and additional volumes. The resupplies are scheduled for 2022, 2023, and 2024. India has agreed to release 5 million barrels from its SPR, holding approximately 39 million barrels. At 2019 levels, that is slightly more than one day’s consumption in India.
The United Kingdom intends to allow its commercial entities to release 1.5 million barrels of oil equivalent to the market voluntarily. Japan plans to remove oil from its reserves. China may decide to release at least 7.33 million barrels.
Following this announcement, oil prices rose. On Tuesday, WTI rose as much as 2.6 percent. Futures prices rose due to the new commitment to sell oil to the SPR in the future. According to the theory, the SPR has agreed to buy in the future, causing prices to rise.
Other analysts believe futures prices rose because the market had anticipated an SPR release and possibly a more significant departure from the United States and other countries. GasBuddy predicted that consumers in the United States would see a 15 to 30 cent drop in gasoline prices over the next few weeks. However, it does not expect an immediate reduction in gasoline prices because gas stations are unlikely to lower costs during Thanksgiving week, one of the busiest travel periods in the United States.
At its next meeting on Thursday, December 2, OPEC+ expects to retaliate by halting its planned 400,000 BPD monthly production increases. It was mainly due to a Bloomberg headline based on the International Energy Forum statement in Riyadh. Suhail Mazrouei, the UAE’s oil minister, stated that he does not believe OPEC+ will change its course. OPEC+ may decide to pause output increases during its virtual meeting next week.
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