The USA rejected any connection between Ukraine crisis and release of Strategic Petroleum Reserve (SPR), Bloomberg reported on March 12 citing Bill Gibbons, an Energy Department spokesman.
Obama’s administration claimed the strategic oil release has been already planned and cannot be attributed to escalating crisis in Ukraine. Gibbons explained that the move is necessary to assess the pipeline system. That is mainly driven by the growing volume of oil extraction in the USA, creation of new infrastructure, and significant changes in the reserve system.
Overall, the USA hopes to sell up to 5 million barrels of oil from its strategic reserves. Potential buyers should send their requests until March 14. The crude oil will be delivered to them from April 1 to April 30. Four million barrels will be taken from Louisiana depot and one million, from Texas repository.
The news sent oil prices lower to $97.66. Thus crude lost $2.37. On March 12, the Financial Times reported that some traders regarded this move by the USA as a warning shot to Russia saying that America may impact oil prices.
Five million barrels is less than 1% of the total oil deposits which are estimated at 696 million barrels. The U.S. SPR was created in 1975 to address possible disruptions in supply. The first test sale was announced in 1990 ahead of Gulf War and in 2011 during crisis in Libya. Back then 30 million barrels of oil were released onto the market.
Russia’s relationships with the West became tense in early 2014 due to political crisis in Ukraine. On March 12, G7 urged Moscow to stop, as they say, ‘annexation’ of Crimea. On that very day the U.S. Senate started to work on sanctions against some Russian officials.
