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More Debate on the Release of Strategic Crude Oil Reserves
Le Monde reports that the heads of France, the UK and the US are in discussions about a release of some of the crude in their strategic oil reserves.
The recent media coverage of meetings between UK Prime Minister David Cameron and US President Obama claimed that the 2 Nations would undertake a joint venture to put more Crude Oil into the markets. Nothing happened.
The Crude Oil price has since become more acute, and French President Nicolas Sarkozy and President Obama are up for reelection. That may be a cynical view of why either Nation would participate in a release of reserves, but that does not make it an incorrect one.
What is certain is that $125 bbl Brent Crude could cause an ongoing increase in the prices of gasoline, diesel, heating oil and petrochemicals.
Taken together, these increases realistically could cause a new recession. That, balanced against the release of reserves, argues for the release to happen sooner and not later.
There appears to be no relief to high Crude Oil prices. Supply is scarce, some experts argue, because of the lack of flow from Iran due to sanctions over its weapons program.
In the meantime, Oil refineries have shut down because they cannot convert the high price of Crude Oil into high-priced gasoline. That takes supply offline.
The last time there was a major release of reserves, in the Summer of Y 2008, the greatest effects on prices only lasted a few months. Today, a few months could be the difference between continuation of the economic recovery that has taken hold in some parts of the World and a new recession. Stay tuned...