President Joe Biden said Tuesday that the administration will tap the Strategic Petroleum Reserve as part of a global effort by energy-consuming nations to calm 2021’s rapid rise in fuel prices.
The coordinated release between the U.S., India, China, Japan, Republic of Korea and the United Kingdom is the first such move of its kind.
The U.S. will release 50 million barrels from the SPR. Of that total, 32 million barrels will be an exchange over the next several months, while 18 million barrels will be an acceleration of a previously authorized sale.
U.S. oil dipped 1.9% to a session low of $75.30 per barrel following the announcement, before recovering those losses and moving into positive territory. The contract last traded 2.5% higher at $78.67 per barrel. International benchmark Brent crude stood at $82.31 per barrel, for a gain of 3.2%.
Rebecca Babin, a managing director at CIBC Private Wealth US, noted that a release was “well telegraphed” and therefore already priced into the market.
“Positioning across the crude complex has been drastically reduced over the past couple of weeks as traders lock in profits ahead of year end reducing the initial reaction,” she added.