Brent crude has seen further increases, reaching $81.10 per barrel, despite U.S. President Joe Biden's decision to release 50 million barrels from the strategic reserves of the United States. The benchmark Brent contracts had ended previous trades up 81 cents, or 1%, settling at $79.70 per barrel. Dr. Anas Al-Hajji, editorial advisor at the "Energy" platform specialized in energy markets, stated in an interview with "Al Arabiya" that the objectives of the decision are divided into two parts: the first being economic due to American voters' discontent with rising gasoline prices, prompting Biden to try to appease these voters. "I still believe that the issue is related to Iran on a political level," he added.
Al-Hajji explained that the price increase was not surprising despite the announcement of the reserve release, as the withdrawal from the reserve will be about 32 million barrels "which is merely a loan or debt to companies that will have to return it within 6 months. This means they will have to buy from the market, leading to additional demand, and there may be a future supply shortage. Therefore, companies may not buy significant quantities that would impact prices, indicating a weak effect of the decision on calming prices."
Al-Hajji considered that the American desire to compensate for Iranian oil is strongly behind this decision, as the release from reserves came upon the recommendation of a strong security advisor, and the countries asked to release from reserves also indicate a relationship with Iran. Regarding the remaining 18 million barrels of the 50 million barrels, Al-Hajji stated that these would be considered a "consequence of a previous decision made in 2015, but Biden has accelerated this withdrawal from reserves at this time."
For his part, oil expert Kamel Al-Harami, in an interview with "Al Arabiya," said that "the decision is not sound, and it is inappropriate to insist on intervening in a commercially natured market." He clarified that the OPEC+ group has been striving in previous periods to support market balance through a clear path plan that ensures sustainable supplies.
Dr. Yousif Al-Shammari, CEO of CMarkits London, described the move to withdraw from reserves in an interview with "Al Arabiya" as unsustainable in the long term, making it difficult to build up inventories in the future at competitive prices.
West Texas Intermediate crude contracts also rose by 81 cents, or 1%, settling at $76.75 per barrel. This comes at a time when OPEC+ indicated that the withdrawal from strategic reserves is unjustified given the current market situation and warned that it might reconsider its decision to increase supply by 400,000 barrels per day monthly, as per its previous agreement if reserves are drawn down. Their next meeting is scheduled for December 2.
These movements in oil markets occur amid rising concerns over the repercussions of the recent wave of the coronavirus in America and Europe, threatening global energy demand.
