President Joe Biden has authorised the sale of 50 million barrels of oil from the US Strategic Petroleum Reserve (SPR) — but the move had little immediate impact on oil prices.

The release of the oil is part of a multinational effort to reduce prices as China, India, Japan, the UK and South Korea all made similar moves in conjunction with the US announcement on Tuesday.

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“American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are too because oil supply has not kept up with demand as the global economy emerges from the pandemic,” the White House said in a statement.

'Exchange' process

The US Department of Energy said the release of the 50 million barrels from the SPR will include 32 million barrels available through an “exchange” and the accelerated sale of 18 million barrels mandated in the Bipartisan Budget Act of 2018.

Companies interested in acquiring oil through the exchange process will be required to submit bids by 6 December with contracts being awarded by 14 December. Deliveries will take place between January and April. Exchange crude will be returned to the SPR between 2022 and 2024.

The release of the oil from the SPR comes after Opec’s refusal to increase oil production beyond its previously-established guidelines. US independents have been similarly wary of increasing production for fear shareholders would punish them for increasing capital expenditure.

In a commentary on the multinational oil release, Rystad Energy said the move marked the emergence of an “anti-Opec+” group led by the US.

“A group of top oil-consuming countries are… taking the supply-side dynamics into their own hands in the unconventional and unprecedented release of strategic petroleum reserves to create artificial looseness in the oil market and deliver a negative blow to oil prices,” senior oil markets analyst Louise Dickson said.

The primary motivator for the SPR release — to reduce prices — did not seem to have the immediate desired effect.

Instead of falling on news of the coordinated release of additional oil onto the market, West Texas Intermediate crude was up about 1.8%, or $1.37, to $78.11 per barrel in early morning trading on the New York Mercantile Exchange. Brent Crude was also up about 1.8%, or $1.46, to $81.18 per barrel.