At the same time, the very decision to sell crude from strategic reserves by major energy consumers is unprecedented in the recent history of the oil market, Head of Oil Markets with Rystad Energy Bjornar Tonhaugen notes
LONDON, November 23. /TASS/. The oil release from inventories of a range of countries, including the US, the UK and China, will not have a significant impact on the cost of fuel raw materials on the world market and will have a short-term effect, Head of Oil Markets with Rystad Energy Bjornar Tonhaugen told TASS.
“The total stock release numbers could exceed 60-70 million barrels based on what we know now. Assuming there is large appetite for these barrels, and the drawdown is around 1 million barrels per day, the SPR (strategic petroleum reserve – TASS) release could provide additional supply to the market from government stocks for approximately 60 days or slightly more, which would be somewhat significant in a 80 million barrels per day global crude market – but only for a couple of months,” the analyst said.
“However, as normally happens from finite SPR releases, and given that the news has been rumored for several weeks, the market reaction may be quite muted,” Tonhaugen noted.
“The spot price premiums versus deferred prices may be most impacted, but not necessarily as much the price level in the market itself, which also depends on what approach OPEC+ will take to this decision, at their upcoming meeting on December 2,” the analyst said.
At the same time, the very decision to sell crude from strategic reserves by major energy consumers is unprecedented in the recent history of the oil market, the expert noted. “It is the first time that these countries, including China, conduct a coordinated release. The last time we saw a similar coordinated plan was during the Libya civil war in 2011, when IEA countries moved to release reserves together, but it was excluding China,” he added.