On Friday the 13th the USA’s President Donald Trump announced the USA’s new plan for the oil emergency. The adopted strategy is quite simple and consist in buying as many oil barrels as possible in order to enrich the SPR’s supply (Strategic Petroleum Reserve).

What is the SPR?

The SPR is the American reserve of petroleum; actually count is 635 million barrels but it could collect up to a maximum of 713 million barrels. It is the largest petroleum reserve in the world, and for this reason, every decision which concerns it is relevant for the rest of the world.

Why the USA takes this decision?

As explained by Shaylyn Hynes, the Department of Energy spokeswoman, the government’s move comes from: the COVID_19 continuous spreading and the disappointing OPEC+ conference. The plan has the aim of: “giving relief to the American energy industry” and to prevent a possible energy crisis.

What happens now?

It is assumed that the natural consequence is that the oil global market is becoming ever more addicted to USA and the last weeks reports were proof of what was already said.

On November 2019 the United States, already at the top of the producer’s rank, produced 12.8 million barrels per day, 400000 more than the second producer the Saudi Arabia and 1.4 million more than Russia (the two protagonists of last week discussion at OPEC+ conference). This data, which proves more than the others the USA superiority, arrives last week with the publication of the weekly EIA (US. Energy Information Administration) report on the weekly oil production: the USA, in the week ended the 6th March, reached an average 15.7 million barrels per day, 5000 barrels per day more than the previous week and 3 million barrels more than the last November figure.

At this point the USA reinforces its position at the top of the rank of the main oil producer of the world, outdistancing Saudi Arabia (2nd in the rank, 12,4 million bpd) of 3 million barrels.

What could be the danger?

The danger could be that the SPR becomes an important means of economic freedom for the US. The dependence of other countries on this huge supply (in periods of low production) could give to the US government the opportunity to exonerate themselves from the laws controlling production.

Naturally this immense potential will give the USA a major advantage in negotiation, what could involve not only other countries but private companies too.

Written by Nicolas Spirito.