Alexey Gromov, Principal Director on Energy studies of the Institute for Energy and Finance, commented on the probability of a new sale of the US strategic oil reserve to the Oil and Capital Internet portal.
"The White House made a mistake in forecasting the dynamics of the global oil price. The administration wanted to start replenishing the SPR at a cost below $75, thinking that such a price would last long enough. But this indicator lasted about a month. It is impossible to buy such a volume of oil at once to fill the SPR at once, neither from a technical point of view, nor from a financial and organizational point of view. It is necessary to prepare competitive procedures, allocate the necessary amount from the budget for purchases. And how can this be done in conditions of high volatility?
The Biden administration, of course, tried to make such purchases, but they were so insignificant in volume that it did not change the overall picture with the devastated SPRS," the expert said.
"The White House wants to prevent new oil price spikes. In the Middle East, he is already openly saying that he needs stability. That even Israel, if it starts to unleash a confrontation with Iran, will not support it. Biden should not allow the cost of gasoline to rise before the election, and therefore oil.
He will not be able to extract reserves for six months in a row, otherwise the country will be left without a strategic reserve at all. The Biden administration probably wants to influence the mood of oil traders by throwing oil reserves from the SPR into the market on a one—time basis. But I repeat, these will be short—term actions and only in extreme cases," Alexey Gromov concluded.
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