US and 30 allied countries to release 60m barrels of oil amid price surge
The United States and 30 countries have agreed to release 60m barrels of oil from their strategic reserves to stabilise global energy markets, the US Department of Energy said on Tuesday, as oil prices surged to a seven-year high.
The move, ahead of Joe Biden’s State of the Union address to Congress, failed to calm fears about supply disruption from the Ukraine crisis and sanctions against Russia. US stock markets fell sharply even after the news.
Oil prices surged after the announcement, with US crude hitting its highest level since June 2014 as Russia bears down on Ukraine’s capital.
West Texas Intermediate crude futures, the US oil benchmark, jumped 11.3% to $106.50 a barrel before dropping back to $105. International benchmark Brent crude advanced 9.5% to trade at $107 – the highest since July 2014 – before falling to $103.
The price surge marks a return to oil prices pushing through the $100-mark since last Thursday when Russia invaded Ukraine. An energy squeeze in what is already a tight market has some analysts fearing oil could top $150 in the coming months.
Biden has repeatedly sought to prepare US consumers for higher gas prices. “I will not pretend this will be painless,” he said on Tuesday, adding that his administration was “prepared to deploy all the tools and authority at our disposal to provide relief at the gas pump”.
OPEC and its oil-producing allies, which includes Russia, are set to meet this week to discuss output for April.
Morgan Stanley raised its near-term oil price forecasts, saying the events in Ukraine have introduced a “risk premium in oil prices that is likely to remain in coming months”.
The bank now sees Brent averaging $110 in the second quarter of the year, up from a prior forecast of $100.
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