Dr Nakhle argues that the banning of US oil exports to face soaring oil prices isn’t straightforward. Several legal aspects must be taken into consideration and are known to take time to implement. Besides that, such a drastic option doesn’t solve the core problem, i.e., protecting the US oil consumer.
The release of the Strategic Petroleum Reserve (SPR) won’t have a structural and lasting impact on oil prices. To sustain the decline in oil prices, large volumes should be released for a longer period and there is currently no ‘serious’ threat to justify such a release.
Over the long run, oil prices will readjust. In the meantime, if Biden’s administration is really serious about easing oil prices, it should first support its domestic production. On this level, major contradictions are seen, on one side the administration calls on OPEC+ to pump more oil, but simultaneously doesn’t create a progressive environment for more local production and investment to take place.
Dr Nakhle further stresses that OPEC+ is likely to remain cautious as major forecasts indicate that the growth in supply will outstrip the growth in demand in 2022 thereby exercising downward pressure on prices.
“Oil Markets: What crisis?“, Dr Carole Nakhle, Nov 2021
“Global Economy and Energy Markets Weekly Commentary – 7th Nov ‘21“, Christof Rühl, Nov 2021
“Oil prices and the US dilemma“, Dr Carole Nakhle, Nov 2021