Energy Secretary Dan Brouillette subsequently tweeted that “The Strategic Reserve has the capacity to store up to 77 million additional barrels of crude oil, which will provide needed relief and confidence to global oil markets.” With benchmark Brent crude coming in at just over $33 per barrel in Friday trading, the administration’s measure would have a price tag of over $2.5 billion.
State Actors
The Trump administration earlier this week had condemned efforts by “state actors” to “manipulate and shock oil markets.” The statement came after Russian negotiators walked away from talks last weekend on cutting production with the Organization of the Petroleum Exporting Countries (OPEC). OPEC members Saudi Arabia and the United Arab Emirates (UAE) then retaliated by slashing prices and flooding oil markets with crude products, leading to already-strained oil prices plummeting over 30 percent during trading this week.
US Pushing Russia Back
Russia’s detonation of the OPEC+ alliance comes against the background of recent American moves to scupper Russian hegemony in European natural gas markets and measures against Russian state oil behemoth Rosneft for skirting American sanctions to purchase crude from Venezuela’s creaking socialist regime.
US Fracking Displeased Russia—and Saudi Arabia
Since their Vienna Agreements of 2016, the uneasy OPEC+ axis had ensured oil prices remained both relatively high and stable by cutting back on supply. However, this policy had the unintentional effect of allowing American producers of more expensive non-conventional (i.e., fracked) oil and gas to garner ever more market share, as the inflated prices helped the U.S. frackers compete against their low cost-base conventional—i.e., Russian and Saudi—competitors.
David Adams
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