Key investment points:
On March 31 local time, the Biden administration announced that the United States would release 1 million barrels of strategic oil reserves every day in the next six months, releasing 180 million barrels of oil in total. This is the largest release since the United States established the oil reserve plan in 1974. How much supply pressure can this plan release? How much impact may it have on oil prices?
Since February, oil prices have risen rapidly, mainly due to the impact of the conflict between Russia and Ukraine on supply expectations. As the world's second-largest crude oil exporter, Russia's crude oil export volume in 2020 was about 4.65 million barrels / day. Earlier, the IEA said that from April, the local oil and petroleum products entering the market may be reduced by 3 million barrels per day. Therefore, the Biden administration's new plan is expected to curb the rise of oil prices in the short term, but it may still be difficult to fill the next export vacancy of Russian crude oil. Whether the oil price center can continue to fall needs to pay attention to the progress of Iran's nuclear agreement and the release of OPEC idle capacity.
Moreover, it should be noted that as of March 25, the US strategic oil reserve inventory had fallen to 568 million barrels, the lowest level since 2002. If the reserves are released as planned, the U.S. crude oil reserve inventory will fall to the 1983 level by October. On the contrary, it will increase the demand for replenishment of U.S. strategic reserves in the medium and long term and form the action force on oil prices.
