LONDON (Dispatches) - The U.S. has announced it will release 50 million barrels of oil from its strategic reserves, in coordination with several major consumer nations including China and India.
The move is being taken in parallel with other major oil-consuming nations, including China, India, Japan, South Korea and the UK.
U.S. President Joe Biden has repeatedly asked the OPEC group of oil-producing nations to boost output more rapidly.
But OPEC has stuck to an agreement to only increase production gradually.
It says it is concerned that a resurgence of coronavirus cases could drive down demand, as happened at the height of the pandemic.
Crude oil prices recently touched seven-year highs, amid a sharp uptick in global demand as economies recover from the coronavirus crisis.
It’s driven up petrol prices and energy bills in many countries.
As part of the coordinated effort, the UK government will allow firms to voluntarily release 1.5 million barrels of oil from privately-held reserves.
It said the action would support the global economic recovery but “any benefit for UK drivers is likely to be limited and short in nature”.
India will release five million barrels, while South Korea, Japan and China will announce the amount and timing of their releases in due course.
Officials said it was the first time that the U.S. had coordinated such a move with some of the world’s largest oil consumers. But analysts questioned whether it would have much impact.
“It’s not large enough to bring down prices in a meaningful way and may even backfire if it prompts OPEC+ [which includes Russia] to slow the pace at which it is raising output,” said Caroline Bain, chief commodities economist at Capital Economics.
It’s not clear how effective the move will be in curbing rising energy prices, amid uncertainty over demand due to a spike in Covid cases in Europe.