Oil prices have dropped sharply as the United States is reportedly poised to make the biggest ever release of emergency crude reserves to tackle soaring fuel costs.
The price of Brent crude – the most commonly used way of measuring the UK’s oil price – fell by nearly 4 US dollars to 109.21 US dollars a barrel on reports that President Joe Biden is considering releasing up to 180 million barrels from the US Strategic Petroleum Reserve.
That would be the biggest release since the reserve was first created in 1974.
The White House is expected to announce its latest measures to address soaring fuel prices later on Thursday – at about 5.30pm UK time.
Fuel and energy costs have been sent soaring amid the Ukraine conflict, with sanctions banning oil imports from Russia pushing the price up to around 139 US dollars a barrel at one stage earlier this month – the highest since 2008.
Prices have eased back a little since then, but crude costs still stand nearly 70% higher than they were a year ago.
The International Energy Agency has also tabled an emergency meeting on Friday to assess the situation.
Desperate times clearly call for desperate measures, and clearly the Biden administration believes the spike in oil prices warrants this move to eat into the country’s emergency supplies
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Desperate times clearly call for desperate measures, and clearly the Biden administration believes the spike in oil prices warrants this move to eat into the country’s emergency supplies.”
She added: “Investors will be assessing the implications of this, and any outcome of emergency talks held by the International Energy Agency later.
“They will also be keeping a close watch on whether members of OPEC+ give hints at their meeting later about the possibility of turning on the production taps more fully – above the current commitment they are expected to approve of around 430,000 barrels a day – but this a strategy they seem so far to be resisting.”
Although Europe relies a lot more on Russia for its natural gas, the country is still the biggest single exporter of oil to the EU.
According to data from Eurostat, around a quarter of the bloc’s oil imports and around 46% of its gas came from Russia in the first part of last year.
The UK is less reliant on Russia for both but prices here largely mirror those in Europe.
