Oil drops as Biden retaliates against OPEC+ by planning to sell more of the US emergency reserves. US crude fell below the $80 per barrel mark.
On Tuesday, there were rumors that the Biden administration intended to sell more of the country’s emergency oil reserves in order to reverse production limits imposed by the producer group OPEC+. But, this may affect the president and his party in elections later this month.
After OPEC announced on October 5 a production cut of 2 million barrels per day starting in November, West Texas Intermediate crude, the standard for U.S. crude, soared to about $94 by October 10. Still, WTI had already fallen to an 8-month low of less than $75 per barrel.
In addition, Tuesday at 11:15 ET, WTI was trading at $81.70 a barrel, up from the session low of $81.33. The projected output cuts by OPEC+ on October 10 caused it to reach a high of $93.48.
Moreover, after hitting an intraday low of $88.81 on Tuesday, London-traded Brent oil traded around the $90 mark. On October 10, Brent reached $98.75.
However, fuel prices in the United States were beginning to rise as a result of the OPEC+-driven increase over the past two weeks. This was terrible news for President Joe Biden and Democrats before the November 8 mid-term election. Saudi Arabia, the largest member of the oil-producing alliance, and Russia are both not huge fans of Biden.
The Biden administration intends to sell an additional 26 million barrels from the Strategic Petroleum Reserve for fiscal year 2023. This came by reports from sources cited by Bloomberg and Reuters on Tuesday. Prior to that, the government has another 14 million barrels from the so-called SPR to sell as part of a six-month push to sell 180 million barrels.
SPR supplies have reached their lowest levels since 1984 as a result of the administration’s strong efforts to reduce gasoline pump prices before the election.
Tuesday saw an average pump price drop from $3.92 to $3.87 per gallon. In fact, it reached a record high of $5 in the middle of June.
