France Plans to Release Oil Reserves to Limit Oil and Gasoline Prices

France expresses its readiness to release several of its strategic reserves of oil jointly with Britain and the United States to potentially limit crude oil price increases and lower gasoline costs for motorists.

Eric Bessin, the Energy Minister of France, recently said that the United States had requested that they join in releasing several of its emergency oil supplies. According to Bessen, there are discussions between France and the International Energy Agency regarding the plan. The United States said that it has not reached a decision as to whether it will tap its Strategic Petroleum Reserve.

Usually, reserves of oil are only released with severe disruption of its supply much greater than currently seen. However, leaders of the West say that they are worried that the crude oil price increase that has been happening for the past months may slow down the recovery of the global economy.

Part of the increase of oil costs, which greatly controls gasoline prices, is due to the tensions between Iran and the West. Moreover, the higher consumption of oil by emerging countries plays a role in the rise of oil prices.

Complaints raised by consumers regarding higher costs of gasoline are greatly weighing on the Presidents of France and the United States. The two are facing a tough re-election battle in the months to come.

In the United States, the average gasoline prices are now higher by $1 per liter. That amount is still lower compared to several international countries but it is already the highest level for the country at this period of the year.

Oil prices worldwide recently dropped following the announcement of France to tap its strategic supply reserves and a report of the U.S. showing a growth of its oil stocks. Light sweet crude oil prices fell by 2% in the western market to reach around $105 per barrel.

However, analysts expressed that the present crude oil price is higher by around $15 per barrel than it should be which should not be the case if the conflict between Iran and the West does not exist. Several analysts say that releasing emergency oil reserves could slash off oil prices to around $100 per barrel.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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