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Oil Climbs a Little as Saudis Issue Caution Over U.S. Reserves’ Release

Commodities Oct 25, 2022 04:16PM ET
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By Barani Krishnan

Investing.com -- Some say OPEC+ doesn’t like how the U.S. is influencing oil prices with its reserves. Others say members of the alliance are smirking at how the Biden administration is creating a bigger hole for America by draining down its emergency crude stockpiles when it might have a real emergency need later for those supplies.

Saudi Energy Minister Abdulaziz bin Salman’s message to the United States on Tuesday seemed to have a combination of both — mild annoyance and derision — as he cautioned about the pitfalls of using the Strategic Petroleum Reserve (SPR) to keep a lid on market prices of both crude and fuel.

“It is my profound duty to make clear to the world that losing (releasing) emergency stocks may be painful in the months to come," the minister, sometimes referred to by his initials as AbS, said at an industry conference in Riyadh.

AbS’ remarks also came right after the head of the International Energy Agency said its members have oil reserves available to conduct another round of releases if needed. 

“We still have [a] huge amount of stocks to be released in case we see supply disruptions,” Fatih Birol, the executive director of the Paris-based adviser, said in a group interview at the Singapore International Energy Week Conference. “Currently it is not on the agenda, but it can come anytime.”

Birol also said that tightening markets for liquefied natural gas worldwide and supply cuts by major oil producers have put the world in the middle of "the first truly global energy crisis."

New York-traded WTI settled up 74 cents, or 0.9%, at $85.32 a barrel, after falling 1.6% in two previous sessions.

London-traded Brent crude settled up 26 cents, or 0.3%, at $93.52 per barrel. It fell as much in the previous session.

President Joe Biden announced the sale of an additional 15 million barrels from the SPR last week to follow through with some 180 million released from the reserve over the past six months by his administration. 

The releases helped pull Brent down from a March high of almost $140 a barrel to the low $80s by September. The higher volumes of oil in the market also created additional supply to refineries, bringing down fuel prices that at one point hit record highs above $5 per gallon. On Tuesday, a gallon of gasoline at U.S. pumps averaged $3.85 a gallon.

The additional SPR release of 15 million barrels is expected to coincide with the 2 million barrels per day cut in global oil supply announced by OPEC+ for November onwards.

The cut announced by OPEC+ had initially triggered a sharp rally in crude prices, bringing Brent back near $100, from an eight-month low of under $83. OPEC+ is led by Saudi Arabia, with Russia as its biggest ally. OPEC+ has been trying to play down the impact of its cuts on the burden of consuming countries, with AbS saying on Tuesday that Saudi sales to Europe stood at 950,000 barrels in September from 490,000 barrels the same time a year ago.

Biden, meanwhile, is trying to ensure that the upcoming OPEC+ production cut does not push fuel prices up before the November 8 U.S. midterm elections. The president has, however, taken heat from his Republican rivals over the use of the SPR, which has pushed the reserve's stockpile to just around 400 million barrels -- its lowest in 35 years.  

The Saudis have had a trying relationship with the U.S. since Biden took office despite the two nations being long-time strategic allies on energy and security. U.S. relations with both Russia and Saudi Arabia have hit their lowest in decades as Biden approved sanctions against Moscow over the Ukraine conflict while accusing Riyadh of supporting the invasion by the Kremlin. 

Biden has said there will be “consequences” for the Saudi action while AbS sought to take the higher moral ground in the dispute on Tuesday, claiming the kingdom had been “the maturer” side in the spat.

Oil Climbs a Little as Saudis Issue Caution Over U.S. Reserves’ Release
 

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Comments (14)
Dave Be
Dave Be Oct 27, 2022 10:30AM ET
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Relax people….within the article it states that this is a “political midterm electtion” move
James Long
FauxNews Oct 27, 2022 9:44AM ET
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Biden should pull all technical and logistics support for the weapons the US sold them. The Saudis are a bunch of 11th century nomads that would still be heating their tents with camel dung were it not for the West.
Michael Roal Casa
Michael Roal Casa Oct 27, 2022 9:24AM ET
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So now they are annoyed. What only they are allowed to influence the price of oil, they cut production to raise prices, someone else brings down that price and they get upset.. Too bad
cc cc
cc cc Oct 27, 2022 9:10AM ET
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so only Saudis are allowed to influence oil price...when others do it they get annoyed, what a joke
gab nea
gab nea Oct 27, 2022 7:21AM ET
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Saudis are very good at dismembering journalists in embassies!
gab nea
gab nea Oct 27, 2022 7:18AM ET
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they cant grow food in the desert! peg the price of food for the Saudis with the price of oil, let's see if they like it! and no weapons to fight in yemen!
Oct 25, 2022 8:50PM ET
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There shouldn't be an OPEC in the first place. we should be drilling our own and the he'll with all these other countries telling us what we're going to be paying , stop bargening, they don't care one inkling about the USA.
Rubbing Hands
Rubbing Hands Oct 25, 2022 8:50PM ET
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without opec more companies would have gone broke during covid and oil could be much higher. OPEC does want to make money, but they do help stabilize the market.
Petet Larkar
Petet Larkar Oct 25, 2022 7:05PM ET
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ban all Saudi oil..mbs putin and all these dicts going down like ye lol
Zhehui Jin
Zhehui Jin Oct 25, 2022 7:05PM ET
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Lol Do you want to see $500 per bbl oil?
Andrew Ulferts
Andrew Ulferts Oct 25, 2022 7:05PM ET
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Zhehui Jin Ooh I do!
trevor hron
trevor hron Oct 25, 2022 7:05PM ET
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All these remarks about lowering oil reliance for green energy but the follow through and tactics arent there to make this happen. Its only going to estrange these oil supplies. Lessening the investments in oil ans gas exploration. Making new oil more and more expensive.
Petet Larkar
Petet Larkar Oct 25, 2022 7:03PM ET
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thse aholes manipulating the oil mkt..ban all Saudi imports
Paul Reid
Paul Reid Oct 25, 2022 5:15PM ET
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What are the Saudis and other Arab nations to do when our green energy policy starves thier people.if we're outlawing oil,what about this issue? I'm not supporting what goes on in other countries but what about these masses of people?
Chris Cummins
Chris Cummins Oct 25, 2022 5:15PM ET
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So your concern is that the people burning the earth to the ground will be looking for jobs? Not sure I see this as a valid concern unless you value a dollar in YOUR pocket more than you value the planet. If you do not have children and have no concern for the future then I can see your point.
Paul Driskill
Paul Driskill Oct 25, 2022 5:15PM ET
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Chris Cummins  wow!!!!,  talk a Chicken Little, the sky is falling comment!!
 
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