Washington – President Barack Obama, concerned about disruptions in Middle East oil supplies, has ordered the release of 30 million barrels of crude from the United States' Strategic Petroleum Reserve, senior officials said Thursday.
"We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery," Energy Secretary Steven Chu said.
White House officials said for their part that the sale of these emergency stocks will take place over the next 30 days, after which time the situation in global oil markets will be evaluated.
"At the end of 30 days the U.S. stands ready to do more as necessary," a senior official said in a conference call, adding that Saudi Arabia and the other members of the Gulf Cooperation Council have agreed to increase crude production by 1.5 million barrels per day through year's end.
Other members of the International Energy Agency, an intergovernmental organization that represents oil-consuming countries, will pitch in another 30 million barrels from their emergency reserves over the next 30 days, bringing the total amount of the IEA release to 2 million bpd.
That is well above the loss of an estimated 1.2 million bpd in Libyan exports stemming from that nation's civil war.
The Obama administration for months had resisted calls to dip into its emergency stocks as a way to bring down prices at the pump, insisting that the strategic reserve should only be used for emergencies.
The Strategic Petroleum Reserve currently holds a "historic high" of 727 million barrels, according to the Department of Energy, and therefore the injection announced Thursday amounts to roughly 4 percent of the total.
"The goal is to meet seasonal increase in demand over the summer," the White House official said, speaking on condition of anonymity. "This is a very significant disruption that has affected the market."
The decision comes two weeks after the Organization of the Petroleum Exporting Countries decided to leave crude-production quotas unchanged even though benchmark oil prices were above $100 a barrel.
Following Thursday's announcement by Washington and the Paris-based IEA, the price of light sweet crude for August delivery on the New York Mercantile Exchange briefly plunged below $90 a barrel and later traded between $91 and $92.
The sell-off marked the third time the International Energy Agency, founded in 1974, has placed part of its reserves on the market.
The first time was during the first Gulf War in 1991 and the second was after Hurricane Katrina damaged rigs in the Gulf of Mexico in 2005.
Meanwhile, the last time the U.S. Strategic Petroleum Reserve drew down part of its inventory was in 2008 in the aftermath of Hurricane Gustav.