Top oil producers Saudi Arabia and Russia are considering pausing their planned efforts to ramp up oil production, according to The Wall Street Journal, after the U.S. and other energy-consuming countries said they would tap their national strategic petroleum reserves in an attempt to bring down gasoline prices.
The Journal reported on Wednesday that leaders in Riyadh and Moscow have led the 14-member OPEC, along with other oil-producing countries, in coordinating output closely. Other members of the cartel – such as the United Arab Emirates – are not sure whether such a pause is necessary, according to the Journal, citing people familiar with the matter.
The move comes after President Biden on Tuesday morning ordered a record-setting 50 million barrels of oil released from the nation's Strategic Petroleum Reserve in hopes of lowering gas prices, a decision made in coordination with other countries including India, the United Kingdom and China.
Established after a 1973-74 oil embargo by Arab members of OPEC, the reserve has been used in several emergencies, including in 2005 after Hurricane Katrina made landfall and destroyed swaths of the Gulf of Mexico oil infrastructure. At the time, the Bush administration authorized the release of 20.8 million barrels of crude oil to U.S. producers.
"The fact is we always get through those spikes but we’re going to get through this one as well as hopefully faster," Biden said in remarks from the White House on Tuesday, adding: "While our combined actions will not solve the problems of high gas prices overnight, it will make a difference. It will take time, but before long you should see the price of gas drop where you fill up your tank."
Proponents of releasing barrels from the emergency stockpile say that doing so would increase oil supplies and reduce prices at the pump, while also generating billions in revenue for the federal government. Still, critics say that releasing emergency supplies is a short-term fix to a problem and does not actually increase the country's oil-production capabilities.
A gallon of gas, on average, was $3.41 nationwide on Tuesday, according to AAA – up from $2.11 a year ago.
Biden has also called on the Federal Trade Commission to probe whether oil and gas companies are engaging in criminal conduct by profiting from artificially high prices at the pump, even as wholesale fuel costs decline.
Although Washington attempted to convince the Saudi-led OPEC and a group of Russia-led oil producers to open up their taps and release more oil, the two groups – which call themselves OPEC+ – rejected the push. The groups are set to meet next week to review a deal they reached to boost their collective oil output.
The deal involves plans to boost output by 400,000 barrels a day each month through next year, until the group hits its pre-pandemic level. In 2020, the group implemented extreme cutbacks as COVID-19 shut down the global economy and demand evaporated.