In this interview with Nour Amache from Asharq Business Bloomberg, Dr Carole Nakhle, CEO of Crystol Energy, comments on President Biden’s decision to release 50 million barrels of oil from the US Strategic Petroleum Reserve (SPR).
The step did not come as a surprise as the Biden administration had prepared the market for such an action over the last few months. It is difficult to single out the impact of such a step on the market at a time when there are other moving parts, including OPEC+ output increase decision and growth in demand.
With respect to US domestic prices, crude oil prices affect the price of refined products such as diesel and gasoline and US consumers are very sensitive to those. To date, no US president has been able to control global prices. The increase in domestic production, however, thanks to the shale revolution allowed US consumers as well as other consumers around the world to enjoy a long period of lower prices. President Biden could have considered providing additional support to the domestic industry, which would have had a more lasting impact than the SPR, but he has been trying to balance between two opposing interests: climate agenda and reducing the impact of high energy prices on the electorate.
Commenting on the potential reaction of Russia, Dr Nakhle argues that the latter will abide by the decision taken collectively within OPEC+. At the end it is not only the Russian reaction which needs to be monitored, but more importantly the reaction of the de facto leader of the producers’ group that is Saudi Arabia.
Watch the full discussion (in Arabic):
“Oil markets: What crisis?“, Dr Carole Nakhle, Nov 2021
“Global Economy and Energy Markets Weekly Commentary – 21st Nov ’21“, Christof Rühl, Nov 2021
“Biden under pressure to ban US oil exports“, Dr Carole Nakhle, Nov 2021
“Oil prices and the US dilemma“, Dr Carole Nakhle, Nov 2021