U.S. President
Donald Trump's proposal to sell half of the United States' strategic oil
reserve surprised energy markets on Tuesday since it counters OPEC's
efforts to control supply in order to boost prices.
The
White House requested in its budget released late on Monday gradually
selling off the nation's Strategic Petroleum Reserve (SPR) starting in
October 2018 to raise $16.5 billion. The U.S. SPR SPR-STK-T-EIA holds
688 million barrels, making it the world's largest reserve, and a
release of half over 10 years averages about 95,000 barrels per day
(bpd), or 1 percent of current U.S. output.
The plan came out just a day after Trump left Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), as part of his first overseas trip.
The U.S. has more leeway to release the SPR crude as its own production C-OUT-T-EIA has surged 49 percent over the past five years. But the move undermines OPEC's efforts to tighten global oil markets by cutting their output this year and likely into 2018.
The announcement pulled down front-month crude futures prices LCOc1 CLc1. However, the budget is not fixed since Congress has the final say and has rejected many White House proposals in the past.
The plan came out just a day after Trump left Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), as part of his first overseas trip.
The U.S. has more leeway to release the SPR crude as its own production C-OUT-T-EIA has surged 49 percent over the past five years. But the move undermines OPEC's efforts to tighten global oil markets by cutting their output this year and likely into 2018.
The announcement pulled down front-month crude futures prices LCOc1 CLc1. However, the budget is not fixed since Congress has the final say and has rejected many White House proposals in the past.
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