U.S. Emergency Oil Reserves Needed After Saudi Attacks

U.S. Emergency Oil Reserves Needed After Saudi Attacks

On Saturday the Trump administration stated it stood ready to tap U.S. emergency oil reserves if wanted after attacks in Saudi Arabia shut greater than half the crude output in the world’s biggest oil exporter.

Yemen’s Iran-aligned Houthis claimed liability for the attack that knocked out about 5% of global production; but, American Secretary of State Mike Pompeo placed the responsibility considerately on Iran.

The Strategic Petroleum Reserve, operated by the Energy Department, is held in heavily-guarded underground caves on the Texas and Louisiana coasts. The world’s biggest oil reserve at present holds almost 645 million barrels of oil, based on the department website, containing 395 million barrels of heavy sour crude and 250 million barrels of light sweet oil.

Former Secretary of State Henry Kissinger started for the production of the SPR in 1975 after the Arab oil embargo spiked gasoline costs and damaged the U.S. economy.

Under the U.S. law, the president can call for an emergency sale from the SPR if the country is confronted with a supply disruption that threatens the economy. The SPR has been used for that objective thrice, most recently in 2011 after violence in Libya.

Washington previously has associated in coordinated drawdowns of emergency oil with the Paris based International Energy Agency, which regulates energy policies of 30 industrialized nations, including the United States.

On Saturday Energy Secretary Rick Perry stated he directed his department to work with IEA on choices for “collective global action” if needed to provide global oil markets.

After the decade-long U.S. oil increase, many politicians say the time has come to decrease the size of the SPR significantly, notes that may fade after Saturday’s attacks.