Crude from Government Stocks to Lower Prices

Summary: Joe Biden was one of many presidents who used strategic stocks to lower oil prices. Indeed, his announcement resembles a similar move by President Clinton in 2000.

This SPR drawdown, if fully implemented, will add about 500,000 b/d to global crude supplies for several months and soften crude prices further in 2022.

ESAI Energy is not convinced this move signals an enduring change in consuming country behavior towards strategic stocks and markets. Still, we acknowledge that the value of saving strategic stocks for an emergency needs to be more credible as governments encourage the energy transition. In the upcoming Global Crude Oil Outlook, we discuss the likely reaction of OPEC+.