US mulls huge oil decision that could dramatically change fuel prices

Drinks companies are tentatively celebrating after the US revealed it’s considering releasing 180 million barrels of oil from its emergency stores. The news has already caused fuel prices to nosedive.

Joe Biden has intonated that the US is considering making the largest release from its petroleum reserve in 50 years, amounting to 180 million barrels, to help lower gasoline prices.

The cost of fuel has risen to a record high following Russia’s invasion of Ukraine. With economic sanctions imposed globally on Russia, the world’s second-largest oil exporter, the flow of oil from the country has been severely disrupted.

In response to the fuel crisis, member countries of the International Energy Agency (IEA) are set to meet tomorrow at midday GMT to decide on a collective oil release, meaning it’s unlikely to be just the US that dips into its oil reserves to plug the gap.

Immediately following the news, oil prices plunged by more than US$5 per barrel; good news for businesses, including many in the drinks industry, which are being financially squeezed by the cost of transporting their goods.

In early March, the US announced plans to release 30 million barrels from its reserves. However, it was unclear whether this was intended to be a straightforward release or an exchange, with buyers required to replace the oil at a later date.

The newly touted figure of 180 million barrels is around six times greater than the United States earlier proposal, and so the world waits to see how this could be achieved, and by what time.

“If it turns out to be as much as that, it would be significant and so would certainly help to a certain extent to fill the short-fall, but not all of it,” Warren Patterson, head of commodities strategy at ING told Reuters. “Another key question is whether this volume would be part of a wider coordinated release”.