The oil market is worried Biden could release another 100 million barrels of crude from strategic reserves, analyst says
- The oil market is worried that further releases from the Strategic Petroleum Reserve could add pressure to prices, Amrita Sen says.
- She told CNBC on Monday that the Biden administration could release another 100 million barrels.
Investors are worried that the US could flood the market with more oil from the Strategic Petroleum Reserves, according to Energy Aspects' Amrita Sen.
The prediction comes after OPEC+ decided earlier this month to slash its production quota by 2 million barrels a day — despite objections from Washington — leading to speculation that the White House could respond with more releases from the SPR to ease prices.
"They are also weighing an emergency release of potentially as much as 100 million barrels," Sen told CNBC on Monday. "You just don't know given the volume of uncertainty."
Earlier this year, the Biden administration announced plans to draw down the SPR by 180 million barrels, and that effort is nearing its conclusion.
Sen added that investors as of late have stayed away from long positions on oil while the market has been flooded with excess sellers.
She also noted the SPR wasn't intended to relieve price pressures and is instead meant to address emergency supply constraints.
"This is a time of energy security, and the administration has already called on 180 million barrels of SPR this year, and it also released about 30 million barrels last year," Sen said.
She added that the SPR is now "absolutely being used to keep prices lower even though that's not what it's meant to be used for."