According to reports, the United States intends to release 50 million barrels of oil from its Strategic Petroleum Reserves in an effort to bring down surging energy and petrol costs.
This approach coincides with those of other major oil-consuming countries, such as China, India, Japan, South Korea, and the United Kingdom.
"To put things in perspective, 50 million barrels equates to an increase in production of 1.6 million barrels per day for one month or 1 million barrels per day for seven weeks." Which, according to Carsten Fritsch, a Commerzbank analyst, "is quite significant."
According to the administration, 32 million of 50 million barrels will be released in the next months and will be returned to the reserve in the coming years.
The remaining 18 million have already been authorised for distribution as part of a hastened oil sale.
The US President, Joe Biden, has frequently encouraged the OPEC group of oil-producing nations to increase supply more quickly; but, OPEC has opted to increase output gradually.
According to OPEC, a recurrence of coronavirus cases might potentially push down demand, as it did during the peak of the epidemic.
Furthermore, crude oil prices recently reached seven-year highs, owing to a significant increase in global demand as economies recover from the coronavirus crisis.
According to a White House statement, “American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand.”
"That's why President Biden is using every tool available to him to work to lower prices and address the lack of supply," it went on.
As part of the coordinated effort, the UK government will also allow firms to voluntarily release 1.5 million barrels of oil from privately held reserves.
India also will release 5 million barrels while South Korea, Japan and China will announce the amount and timing of their release in due course.
The effort by Washington to team up with other major economies to lower energy prices sends a warning to OPEC and other big producers that the need to address concerns about the high crude oil prices, which happen to be up more than 50% this year.
It has also been said that the action will assist in global economic recovery, but "any benefit for UK drivers is likely to be limited and short in nature."
Written by Naomi Adeoti
Research compiled by Billy Ryan