# Exclusive-U.S. asks Japan, China, others to consider tapping oil reserves -sources
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-11-18
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Biden administration seeks global oil release
Meta Description: U.S. President Joe Biden seeks global action to lower energy prices, prompting Asian nations to weigh coordinated stockpile releases, challenging OPEC
URL: https://financedigest.com/exclusive-u-s-asks-japan-china-others-to-consider-tapping-oil-reserves-sourceshtml

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By Trevor Hunnicutt, Jarrett Renshaw and Timothy Gardner

WASHINGTON (Reuters) – The Biden administration has asked some of the world’s largest oil consuming nations – including China, India and Japan – to consider releasing crude stockpiles in a coordinated effort to lower global energy prices, according to several people familiar with the matter.

The unusual request comes as U.S. President Joe Biden fends off [political pressure over rising pump prices and other consumer costs driven by a rebound in economic](https://www.financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strains.html "UAE plans long-term economic ties with Israel despite political strains") activity from lows plumbed early in the coronavirus pandemic.

It also reflects U.S. frustration with members of the [Organization of the Petroleum Exporting Countries and its allies who have rebuffed repeated requests from Washington to speed up their production](https://www.financedigest.com/organic-expansion-to-run-through-the-mens-grooming-products-market.html "Organic Expansion To Run Through The Mens Grooming Products Market") increases.

We’re talking about the symbolism of the [largest consumers of the world](https://www.financedigest.com/at-chinas-largest-trade-fair-exporters-worry-about-world-economy.html "At China’s largest trade fair, exporters worry about world economy") sending a message to OPEC that ‘you’ve got to change your behavior,'” one of the sources said.

In Asia, where China said it is working on a crude release, [oil prices](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook") extended declines prompted by the U.S. request, after settling on Wednesday further below seven-year highs struck in early October.

Biden and top aides have discussed the possibility of a coordinated release of stockpiled [oil with close allies including](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream") Japan, South Korea and India, as well as with China, over the past several weeks, the sources said.

The US and allies have coordinated strategic petroleum reserve releases before, for example in 2011 during a war in OPEC member Libya.

But the current proposal represents an unprecedented challenge to OPEC, the cartel that has influenced [oil prices](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain") for more than five decades, because it involves China, the world’s biggest importer of crude.

A Japanese industry ministry official said the United States has requested Tokyo’s cooperation in dealing with [higher oil](https://www.financedigest.com/oil-set-to-end-turbulent-2022-modestly-higher.html "Oil set to end turbulent 2022 modestly higher") prices, but he could not confirm whether the request included coordinated releases of stockpiles. By law, Japan cannot use reserve [releases to lower prices](https://www.financedigest.com/oil-prices-set-for-weekly-fall-on-stockpile-releases.html "Oil prices set for weekly fall on stockpile releases"), the official said.

A senior cabinet official declined to comment.

China’s state reserve bureau said it was working on a release of [crude oil reserves although it declined to comment](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") on the U.S. request.

A South Korean official confirmed the United States had asked Seoul to [release some oil reserves](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure").

“We are thoroughly reviewing the U.S. request, however, we do not release oil reserve because of [rising](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") oil prices. We could release oil reserve in case of supply imbalance, but not to respond to [rising oil](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside") prices,” the official said.

The U.S. share of any potential release of reserves would need to be more than 20 [million to 30 million barrels to affect markets](https://www.financedigest.com/global-cryogenic-submerged-motor-pumps-market-to-create-an-absolute-opportunity-of-us-714-4-million-by-2030.html "Global Cryogenic Submerged Motor Pumps Market to Create an Absolute $ Opportunity of US$ 714.4 Million by 2030"), according to a U.S. source who participated in the discussions. Such a release could be in the form of a sale or a loan from the U.S. Strategic Petroleum Reserve – or both.

The SPR was set up in the 1970s after the Arab [Oil Embargo to ensure the United States has adequate supply](https://www.financedigest.com/oil-prices-rise-as-china-eases-covid-curbs-u-s-storm-fuels-supply-worries.html "Oil prices rise as China eases COVID curbs, U.S. storm fuels supply worries") to weather an emergency. U.S. [crude oil](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns") in Strategic Petroleum Reserves, https://fingfx.thomsonreuters.com/gfx/ce/klpykdleepg/USCrudeSPRNov2021.png

Several people familiar with the matter cautioned that negotiations over a coordinated supply release have not been finalized nor has any final decision been made about whether to pursue any specific course of action on [oil prices](https://www.financedigest.com/oil-prices-rise-on-u-s-drawdown-chinese-fears-weigh.html "Oil prices rise on U.S. drawdown, Chinese fears weigh").

The White House declined to comment on the detailed content of conversations with other countries.

After [Reuters reported](https://www.financedigest.com/thomson-reuters-report-reveals-risk-compliance-staff-expect-to-see-significant-benefits-from-artificial-intelligence-ai-and-distributed-ledger-technologies.html "Thomson Reuters Report Reveals Risk & Compliance Staff Expect to See Significant Benefits from Artificial Intelligence (AI) and Distributed Ledger Technologies") on the White House discussions, U.S. crude and global benchmark Brent slumped, with the latter dropping below %80 a barrel. \[O/R\]

OPEC and other producers including Russia, known collectively as OPEC+, have been adding around 400,000 barrels per day to the market on a monthly basis, but have resisted [Biden’s calls](https://www.financedigest.com/biden-begins-fifth-call-with-chinas-xi-looking-to-tamp-down-taiwan-tension.html "Biden begins fifth call with China’s Xi, looking to tamp down Taiwan tension") for more rapid increases, arguing the rebound in demand could be fragile.

OPEC Secretary General Mohammad Barkindo said on Tuesday he [expected a global supply](https://www.financedigest.com/gsk-expects-us-launch-of-rsv-vaccine-with-no-supply-issues.html "GSK expects US launch of RSV vaccine with no supply issues") surplus to emerge as soon as December.

“These are signals that we have to be very, very careful,” he told reporters.

Rising oil prices have vexed [Biden ahead](https://www.financedigest.com/stocks-dollar-pause-ahead-of-powell-biden-speeches.html "Stocks, dollar pause ahead of Powell, Biden speeches") of the 2022 midterm elections which will determine whether his Democratic party maintains slim majorities in the U.S. Congress.

U.S. gasoline prices average $3.41 per gallon recently, according to AAA, more than 60% higher than a year ago as the [economy has rebounded from the COVID-19 pandemic](https://www.financedigest.com/uk-economy-finally-bigger-than-before-pandemic-in-november.html "UK economy finally bigger than before pandemic in November").

Several Biden aides attribute his [falling public approval ratings in recent months](https://www.financedigest.com/japans-factory-output-posts-biggest-fall-in-8-months-on-weak-autos-chips-sectors.html "Japan’s factory output posts biggest fall in 8 months on weak autos, chips sectors") to worsening inflation from energy to food and other areas. The [consumer price](https://www.financedigest.com/ikea-reports-record-sales-as-price-hikes-offset-weakening-consumer-confidence.html "IKEA reports record sales as price hikes offset weakening consumer confidence") index is up 6.2% over the last 12 months, with its energy components up 30%.

The Paris-based International Energy Agency, which monitors national SPRs for members that include the U.S. Japan and most western countries, declined to comment. The IEA in the past has coordinated releases involving several countries.

(Reporting by Trevor Hunnicutt, Jarrett Renshaw and Tim Gardner; Additional reporting by Valerie Volcovici in Washington, Noah Browning in London, Nidhi Verma in New Delhi, Yuka Obayashi and Aaron Sheldrick in Tokyo, Heekyong Yan in Seoul, Muyu Xu in Beijing; writing by Richard Valdmanis; Editing by David Gregorio and Stephen Coates)


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