US to sell additional 20 million barrels of oil from strategic reserve

The US government will sell an additional 20 million barrels of oil from Strategic Petroleum Reserve as part of the Biden administration's effort to bring down oil prices. This makes the fifth such sale that President Biden has authorized. White House continued to blame disruptions caused by Russia-Ukraine conflict for the high prices. The White House also announced that the Department of Energy is proposing a rule change regarding how the federal government acquires oil for the strategic reserve. The new rule, if adopted, would permit fixed-price contracts as well as index-price contracts. The current rule requires purchase prices to be set by a price index, with the price paid being based on market prices at the time of delivery. Oil prices have remained volatile in recent weeks as fears of a recession affect demand while concerns continue to rise about supply constraints amid the war in Ukraine.

Inflation in the US touched a 40-year high in June mainly due to high fuel prices. The US Treasury Department estimates that the SPR releases by the Biden administration and its international partners have reduced the price of petrol by up to 40 cents per gallon. Average petrol prices in the US currently stand at about $4.32 a gallon, or 4.54 litres, data from the AAA motoring website showed. This is down from roughly $5 a gallon last month. The Biden administration said it is also moving ahead with a proposal to allow fixed-price forward purchases of crude oil to replenish the SPR and encourage short-term production.