World leaders announced the coordinated release of strategic petroleum reserves today in an effort to force oil and gas prices lower amidst rapidly rising inflation. The US, India, China, Japan, Republic of Korea and the UK are among the countries participating.
WTI’s initial reaction hasn’t exactly gone according to plan. Traders, who have seen these attempts fail before, are underwhelmed by the numbers. When attempted in June 2011, WTI fell $5/barrel on the day of the announcement but rallied $11 over the next month [see: Not Terribly Slick.]
It took a severe correction in late July to make a meaningful difference. Even then, it didn’t last.
This time, we didn’t even get the initial dip as there is a very good chance that OPEC+ will simply offset the paltry release by adjusting their own production.
The real solution will need to come, as it always does, from political pressure. Last time I checked, the US is still the principle supplier of military arms to the Saudis. Perhaps if the US were to threaten an arms embargo…
Oh, look, here’s one now.
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