The record-high release of crude oil from the U.S. Strategic Petroleum Reserve will end as scheduled this fall, the White House's Special Presidential Coordinator for International Energy Affairs Amos Hochstein told Yahoo Finance.
"We can't be an oil supplier. It's a reserve and so we have to keep that," Hochstein said, adding that he did not expect this to lead to price spikes because the oil industry was already preparing to increase production once the SPR release ended.
"There's a little bit of hysteria at the moment in the analysis of oil markets," Hochstein said, adding that he had had conversations with oil companies and had their word they would increase production to replace the oil that is currently coming out of the SPR.
The plan, announced in April, saw a total of 180 million barrels of crude being released from the Strategic Petroleum Reserve to counter the inexorable increase in oil prices amid a tight market, at a rate of some 1 million bpd. Some of that oil reportedly ended up getting exported, including to China, which prompted some
When the plan was announced, there were warnings that it could backfire, pushing prices higher instead of lower because the SPR would need to be replenished after this substantial draw.
Currently, oil prices - and gasoline prices in the U.S. - are down, but this has less to do with the SPR release than with worry that the Fed will hike rates again and more sharply, which could in turn lead to a slowdown in economic growth. The supply environment remains tight.
This might change, however, according to Hochstein, who told Yahoo Finance that several oil industry CEOs had assured him that they will be boosting production by a combined 800,000 bpd to 1 million bpd by the end of the year.