The White House announced this afternoon that India, Japan, China, South Korea and the UK will also use part of their strategic stock to push the oil price, and therefore also the petrol price.
Price rises due to recovery
The move, led by the Americans, comes in response to what the US sees as the reluctance of OPEC+, the club of the oil exporting countries, and Russia to pump enough oil to meet growing demand.
Worldwide demand for oil has grown enormously this year as the economies are running again. That means more (freight) traffic, more shipping and more aviation. All these things require oil and that drives up the price.
80 dollars for a barrel
A barrel of oil now costs about 80 dollars (71 euros). That is more than three times as much as at the start of the pandemic. This also translates into higher prices at the pump.
In the Netherlands, a liter of petrol along the highway now costs 2.14 euros. In the US, a liter costs less than 80 cents converted, but for Americans that is spectacularly high.
Reason enough for President Biden to take very unconventional measures. He is already proud of the fact that his plan is working. A White House press release said the oil price has already fallen by about 10 percent in recent weeks, just from holding talks with other countries about using its reserves.
But whether the step will actually help is uncertain, says ABN Amro oil expert Hans van Cleef. “Whether it really helps in the longer term remains to be seen.”
It cannot be ruled out at all that OPEC decides to pump less, because more oil is being marketed, says Van Cleef. If that counter-reaction occurs, any price effect is negated.
We may already know what OPEC will do next week. The club then discusses how much oil the members will pump in the coming months.