The United States is still planning on replenishing the nation's crude oil emergency stockpiles when the price of oil goes down, White House energy advisor Amos Hochstein said on Thursday.
The White House energy advisor's comments come as a million barrels of crude oil continue to leave the nation's Strategic Petroleum Reserves every day-and as OPEC+ prepares to slash its production in November, sending prices higher.
The White House made the decision in March to release a million barrels of crude oil per day from the nation's petroleum reserves to supplement the market while U.S. production ramped up to meet demand, with the intent on lowering prices. The drawdowns were supposed to last until October, but a portion of the sale of reserves has been pushed out into November-the month when OPEC+ will likely see about a million bpd cut from its production.
The United States, however, has seen just a 200,000 bpd increase in crude oil production since the SPR decision was made.
Removing the SPR releases and OPEC+ production from the equation starting in November, global crude oil supplies are expected to be roughly 2 million bpd less than what we are seeing today. Nevertheless, the White House is standing by its plan to replenish the SPR when prices fall. When or if that will ever come to pass is not known, but the U.S. government has previously said it is unlikely to happen before the second half of next year.
Replenishing the nation's crude stockpiles is no small feat. So far this year, 177 million barrels have been sold out of this emergency inventory. And with the market soon seeing 2 million bpd less in terms of supply, it is unclear just where this oil would come from.
Still, the White House is putting on a brave face. Hochstein said on Thursday that oil prices hadn't spiked as much as the White House initially feared following the OPEC+ announcement.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
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Comments
1- Brent crude oil price is trending upward to $110 a barrel and is projected to remain there if not increase for at least the next five years until global investments in production expansion reach fruition.
2- The tightness of the global oil market coupled with robust demand and a fast-shrinking spare oil production capacity including OPEC+’s will virtually make it impossible for the United States to replace the released SPR crude.
3- The US Department of Energy (DoE) has only two sources to replace the SPR crude: shale oil production and the global market. However both are unavailable. US shale oil is a spent force incapable of raising production. The global oil market has no crude oil to spare. The SPR, currently at 427 million barrels, is at its lowest since 1984.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert