The Biden administration is scrambling to ease inflation concerns fueled by the rising energy prices. The latest move has asked China and some other large oil consumers to use their emergency reserves to cool down global prices.
According to Reuters, President Joe Biden and his top aides have discussed a possible release of crude oil stockpiles over the past weeks with allies including Japan, South Korea, and India.
During a virtual summit between Biden and Chinese leader Xi Jinping this week, the U.S. requested China to release its oil reserves as part of economic cooperation and energy security talks.
“We’re talking about the symbolism of the largest consumers of the world sending a message to OPEC that ‘you’ve got to change your behavior,'” Reuters citing one source, said.
The unusual discussions of a coordinated effort to lower energy prices came after the Organization of the Petroleum Exporting Countries (OPEC) decided to stick to its current oil production plan, defying calls from Biden to increase their output to cool global energy markets.
But the new proposal is expected to present an unprecedented challenge to OPEC because it involves China, the world’s biggest importer of crude.
In their responses, China’s state reserve bureau said it is working on releasing crude stockpiles.
In Japan, an industry ministry official said they had received a request from the United States on cooperation in dealing with higher oil prices. Still, they could not confirm whether the proposal included coordinated releases of stockpiles. By law, Japan cannot use reserve releases to lower prices.
In South Korea, an official said they are thoroughly reviewing the U.S. request but also said, “we do not release oil reserve because of rising oil prices. We could release oil reserve in case of supply imbalance, but not to respond to rising oil prices.”
According to the Energy Department, the U.S. currently holds more than 600 million barrels of crude oil in the Strategic Petroleum Reserve. Secretary Jennifer Granholm said it could be tapped to lower prices.
Reuters cited several sources familiar with the matter, saying that the negotiations over a coordinated stockpile release have not been finalized, nor has any final decision been made about whether to pursue any specific course of action.
The Biden administration has refused to increase domestic oil and gas output as they are pushing for paring the greenhouse gas emissions and combating climate change. But Biden’s calls for more rapid increases from OPEC and Russia have met with resistance so far.
The inflation pressure, driven by soaring gas prices, has weakened Biden’s approval rating to just 41%, according to a Washington Post-ABC News poll released last week. About half of respondents blamed rising inflation on his administration—not the supply chain issues.