US Plans to Release 17 Million Barrels of Oil as Crude Prices Surge to $110

The United States is preparing to release 17 million barrels of crude oil from its Strategic Petroleum Reserve in an effort to ease pressure on global oil prices and improve supply availability. The move comes as international crude prices approach $110 per barrel amid growing concerns over supply disruptions linked to the war involving the United States and Iran and attacks on ships in the Gulf region.
West Texas Intermediate (WTI) crude rose 3.51% to $101.40 per barrel on Saturday, while Brent crude climbed 3.72% to around $110 per barrel.
The US initiative aims to increase the availability of oil in international energy markets and contain the upward pressure on prices. Concerns over global supply have emerged as a major factor behind the recent rise in crude prices. The war involving Iran and the United States, along with attacks on ships in the Gulf region, has disrupted oil transportation. Restrictions and disruptions in the Strait of Hormuz have added to market uncertainty.
The Strait of Hormuz is one of the world's most important maritime routes for oil shipments. Any disruption to traffic through the waterway can make it difficult for crude oil to reach several countries, raising concerns about the availability of supplies and pushing prices higher.
When energy markets anticipate a potential shortage, crude prices tend to rise. The United States is seeking to ease this pressure by making additional oil available from its emergency reserves.
On Friday, the US Department of Energy invited companies to submit proposals under a new oil exchange programme. The arrangement will allow companies to obtain oil from the government now and return it at a later date under specified conditions.
The Strategic Petroleum Reserve (SPR) is an emergency stockpile of crude oil maintained by the US government for use during crises. It can be tapped during wars, supply disruptions or periods of unusual price increases. Under the latest plan, the government is preparing to make 17 million barrels, or approximately 1.7 crore barrels, available to companies through an exchange arrangement.
Under this system, companies receive crude oil immediately but must return it later in accordance with the agreed terms. Releasing additional oil can increase near-term availability in the market and reduce the need for companies to purchase as much crude through other channels to meet their requirements. This could help ease upward pressure on prices.
However, releasing oil from emergency reserves does not guarantee an immediate decline in international prices. If the war continues, shipping routes remain disrupted or significant supply shortages persist, crude prices could remain elevated despite the additional oil entering the market.
The latest initiative is also linked to a broader international commitment made in March. At that time, the United States pledged to make 172 million barrels of oil available from its strategic reserves as part of a coordinated initiative involving around 30 member countries of the International Energy Agency (IEA).
The broader plan aimed to release 400 million barrels of oil from emergency reserves worldwide to reduce the impact of supply disruptions and stabilise international markets. However, implementing the arrangement has proved difficult.
An earlier US offer attracted limited interest from companies. In June, companies expressed interest in borrowing only around 500,000 barrels of oil. One reason was the terms attached to the programme. Companies could be required to return up to 24% more crude oil than they originally borrowed, making the arrangement less attractive.
Under those conditions, companies receiving oil would have to return a larger quantity in the future than they obtained initially. The response to the latest offer will therefore be closely watched. Greater participation by companies could help the United States deliver additional supplies to the market through its reserve programme.
US efforts to improve oil availability are not limited to releasing crude from emergency stockpiles. Earlier this month, US President Donald Trump and Russian President Vladimir Putin also reached an understanding on allowing Russian diesel exports. An initial release of around 300,000 tonnes of diesel is expected.
Increasing diesel supplies could provide relief to markets facing availability pressures. However, the move has also triggered political controversy. Ukraine and European leaders have criticised the easing of restrictions, arguing that allowing Russian oil products to be exported could provide Moscow with an economic benefit.
The developments highlight the political complications surrounding efforts to control energy prices. Decisions on oil supplies are closely connected with the ongoing war, sanctions and the competing interests of different countries.
The Group of Seven (G7) major industrialised nations has also announced a separate emergency oil release plan. On October 2, the group unveiled an initiative to make approximately 100 million barrels of oil available to international markets over four months. The plan will be implemented through the International Energy Agency and also places emphasis on increasing diesel supplies to help address shortages.
The US and G7 initiatives share the objective of increasing oil availability in global markets. Additional supplies can help narrow the gap between demand and available crude, potentially limiting further price increases. However, emergency reserve releases are a temporary measure rather than a permanent solution. If normal supply routes remain disrupted for an extended period, drawing on stockpiles alone may not be sufficient to keep prices down.
For India, which imports a large proportion of its crude oil requirements, movements in international prices have significant implications. Higher crude prices increase the country's import bill and can raise costs for oil companies and the wider economy.
If the US reserve release and other international initiatives increase global supply and bring crude prices down, India could benefit from lower import costs. The extent of any relief, however, will depend on the scale and duration of the decline in international prices.
A reduction in global crude prices would not automatically translate into an immediate cut in petrol and diesel prices in India. Domestic fuel prices are influenced not only by international crude benchmarks but also by the rupee-dollar exchange rate, oil companies' costs, taxes imposed by the central and state governments, and other expenses.
Consequently, the impact on Indian consumers will depend on how much international prices fall and how long the decline lasts. If supply concerns persist and crude remains around $106 per barrel or higher, the relief could be limited. The effectiveness of the US reserve release will ultimately depend on whether additional supplies can offset disruptions in global oil transportation and ease sustained pressure on energy prices.