The White House announced a "historic release" of one million barrels a day of oil from the country's emergency stockpile in a bid to cool crude prices, and has also said it will seek to punish some US oil companies that do not begin drilling.
The new release, by far the biggest ever announced, will last for six months, amounting to about 180 million barrels in total, draining almost a third of the US's Strategic Petroleum Reserve.
“The scale of this release is unprecedented: the world has never had a release of oil reserves at this one million per day rate for this length of time,” said the White House. “This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.”
The White House also called on US oil producers to increase output and said it would punish those that were not making use of their drilling licences on public lands.
"Today, President Biden is calling on Congress to make companies pay fees on wells from their leases that they haven't used in years and on acres of public lands that they are hoarding without producing," the White House said.
“Companies that are producing from their leased acres and existing wells will not face higher fees. But companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre.”
A person familiar with the White House’s plan for the oil release said the US government would replenish the reserves later at a price of $80 a barrel. The White House is also seeking co-operation from other western oil consumers to release oil from their reserves, said the person.
West Texas Intermediate, the US crude oil benchmark, was down 4.9 per cent at $102.56 a barrel on Thursday. – Copyright The Financial Times Limited 2022
