United States to make available 50 million crude barrels to resolve oil crisis

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United States to make available 50 million crude barrels to resolve oil crisis

The United States will release 50 million crude oil barrels from its strategic reserve pile into the country’s market in December 2021. The decision has been taken by the Joe Biden-led American government in tandem with other major economies of the world such as China, Great Britain, Japan, South Korea and India.

The decision has been taken in an attempt to bridge the divide between the demand and supply of crude oil. The growing demand-supply gap has also contributed to inflation in each of these aforementioned nations’ economies.

The US came up with the idea of creating its “Strategic Petroleum Reserve” in 1975 and presently, it’s the largest such crude reserve in existence in the world. In terms of capacity, the reserve can hold up to 714 million barrels of crude although, at present, it contains 605 million barrels.

The reserve comes under the overview of the American energy department.

The United States' attempts to resolve the oil crisis

Meanwhile, the American government will release the 50 million barrels of crude in two different ways.

While 32 million barrels will be loaned in the open market with the reserve’s stocks replenished in the forthcoming months, the remaining 18 million barrels will be sold in the open market. Justifying the need to take the decision in the first place, Jennifer Granholm, Energy Secretary said, via a statement, “As we come out of an unprecedented global economic shutdown, oil supply has not kept up with demand, forcing working families and businesses to pay the price.

This action underscores the president’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery”. Apart from the United States, India will be releasing five million crude barrels from its emergency reserve.

The Indian government’s press statement said, “India has repeatedly expressed concern at the supply of oil being artificially adjusted below demand levels by oil-producing countries, leading to rising prices and negative attendant consequences”.