In his analysis, Stephen Schork said, world oil prices could still rise higher even though the US and other consuming countries released millions of barrels of oil from their strategic reserves to dampen the current price spike.
No country’s strategic oil reserves are there to try to manipulate market prices. Strategic petroleum reserves exist only to offset unexpected short-term supply disruptions.
According to the Schork Report, on Wednesday (11/24) to CNBC, the price of oil this year has soared more than 50%, in which the demand has exceeded supply. The reason is that more and more countries are emerging from the national quarantine rules, which have been in place since last year due to the Covid-19 coronavirus pandemic.
In addition, considering that more countries are reopening their borders, this means the resumption of international travel, which also increases the demand for aircraft fuel.
Earlier, President Joe Biden announced on Tuesday (23/11), that the US would release 50 million barrels from its reserves. This strategy is part of a global effort with energy-consuming countries to curb the rapid increase in fuel prices.
Of the total 50 million released, 32 million barrels will be utilized in an exchange over the next few months. Then the remaining 18 million barrels will be the acceleration of the previous official sales.
There are also countries that are committed to working with the US, including Japan, India, China, South Korea, Japan, and the UK. So far, the UK has agreed to release about 1.5 million barrels. India is committed to releasing 5 million barrels. While China, Japan, and South Korea have not announced specific figures.
According to the US Energy Information Administration, this year the world consumes 97.53 million barrels of oil per day (BPD), up from 92.42 million BPD in 2020. By 2022, this consumption will increase to 100.88 million BPD.
“It’s a clear sign of desperation, that this is the only instrument in the box and it won’t work. I believe, in this case, the market will call the US bluff, and we are likely to see higher prices rather than lower prices one month from now,” said Schork.