White House Prepares Oil Reserves To Prevent High Energy Costs
Get ready because the White Houseis getting ready for a potential release of oil reserves to help lower prices and prevent high energy costs from undermining sanctions against Iran, a source told Reuters.
U.S. officials will monitor market conditions over the next few weeks, watching whether gasoline prices fall after the September 3 Labor Day holiday, as they historically do, the source said.
It was too early to detail the size of any release from the U.S. Strategic Petroleum Reserve and other international stockpiles if a decision to proceed was taken, the source said.
Oil prices have surged in recent weeks, with Brent crude prices closing in on $120 a barrel, up sharply from below $90 a barrel in June. The United States and other Group of Eight countries studied a potential oil release in the spring but shelved the plans when prices dropped.
As prices rise again, U.S. officials were now collecting information from the market about potential needs and studying futures, production numbers and data on Iranian oil exports.
“The driving force in this is both impact on the economy and impact on the Iran sanctions policy,” the source said, noting that Washington did not want rising oil prices to create a windfall for Iran while international sanctions were having an effective impact on its crude exports and revenues.
The United States has not yet held talks with international partners about a coordinated move. The source noted that Britain, France, Germany and other partner nations in the Paris-based International Energy Agency (IEA) were receptive to a potential release a few months ago when conditions were similar.
Those countries were concerned about the impact of high oil prices on the global economy and Iran then, and those concerns remain equally relevant now.
“The logic behind a potential release in the spring is at least if not … more true today,” the source said.
Within the United States, tapping reserves could spark criticism from Republicans, who would cast it as a political move to boost Democratic President Barack Obama’s chances in the November 6 election.