Oil prices fall after US ponders record-breaking release of crude reserves
Oil prices have dropped after White House officials said the US was considering a record-breaking release of crude oil reserves to allay fears of shortages after the Russian invasion of Ukraine.
A barrel of Brent crude fell more than 5% to $105.50 (£80.40) on Thursday as traders digested the impact of the largest-ever release since the reserve was created in 1975.
The war in Ukraine has sparked concerns that sanctions against Russia, which is the world’s largest exporter of oil to global markets and the second largest crude oil exporter behind Saudi Arabia, would lead to a cut in supplies.
Brent crude hit $139 a barrel earlier this month after sanctions were slapped on Moscow by the US and its allies. Oil prices have fallen back since then, but Brent crude is still almost 70% higher than it was a year ago.
White House officials said Joe Biden would make a statement at 1.30pm local time (1830 BST), to set out “his administration’s actions to reduce the impact of [Vladimir] Putin’s price hike on energy prices and lower gas prices at the pump for American families”.
The US is the world’s largest oil producer, producing about 12m barrels a day. Russia produces about 10m barrels a day.
Traders said the signal from the US administration of higher flows of oil into the international system combined with lower than expected manufacturing output in China could depress prices further.
Beijing has continued to lock down cities affected by a handful of Covid-19 cases, limiting factory production in March. While some Chinese officials have hinted at a change of policy and the easing of restrictions, President Xi Jinping has maintained tough rules on individuals and businesses once coronavirus has been detected.
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