The U.S. is on the verge of a resource crisis, forcing the White House to actively take action to stabilize the oil market. Crazy gasoline prices in the U.S. have made the American public extremely angry, and large companies are losing huge amounts of money due to unpredictable spikes in the oil market.
The U.S. is experiencing a huge oil shortage. The last time such a shortage was observed back in 1987 and 2001. Currently, the U.S. has 532 million barrels of strategic oil reserves. Every week the number of million barrels is decreasing by 5.3 million. At best the U.S. oil reserves have two years left. But from February 25 to May 20, reserves fell by another 50 million as the manufacturing sector intensified. However, these are government resources. In addition, some of the oil is in the hands of the private sector, and their resources are sufficient for 8 years. The problem is exacerbated by the low rate of oil production in the US. The U.S. produces 11.9 million barrels of crude oil a day, with an average increase of 25,000 barrels a month. The U.S. has imposed an embargo on oil supplies from Russia, which has deprived Americans of about 500,000-600,000 barrels a day or about 15-18 million barrels of oil a month.
On May 23 the U.S. retail price of a gallon of gasoline set a new all-time record of $4.60 per gallon, or $1.20 per gallon. That’s the national average. In California, for example, a gallon costs $6.07, or $1.60 per gallon of gasoline. Prices dropped slightly when the US begun to empty its strategic reserves. A barrel of oil in the U.S. currently costs about $114.
The U.S. has long tried to implement a plan to redirect oil supplies from Saudi Arabia. Washington has attempted several times to persuade the Saudis to increase oil supplies to the international market so as not to create a deficit since the U.S. imposed an oil embargo on Russia. So far, the U.S. requests have been ignored by the Saudis. Increasing oil production would have meant Saudi Arabia breaking the OPEC+ agreement, which is more important to Riyadh than ties with America for that matter. It got to the point where the U.S. sent a delegation to negotiate with Saudi Arabia. White House Middle East Policy Coordinator Brett McGurk and Amos Hochstein, senior adviser for global energy security at the State Department, flew to Arabia. The meeting took place on May 24. The U.S. had hoped that increased oil production in Arabia would help expand the oil sanctions package for Russia and reduce the price of fuel in the U.S., as it has risen too much recently. The Arabian side responded that the oil embargo against Russia would anyway lead to a shortage of oil on the world market and that an increase in oil production in Arabia itself would not solve this problem. In this case, the U.S. will be able to use the No Oil Producing and Exporting Cartels Act NOPEC, which allows filing lawsuits against OPEC member countries. The essence of the lawsuit is a violation of antitrust laws. In practice, such a trick is quite difficult to implement, because the lawsuit will lead to a freezing of foreign reserves of Saudi Arabia in the U.S., and this can provoke a complete refusal of oil supplies from Saudi Arabia, and then the oil market would collapse.
The U.S. is considering the pressure on Venezuela and Iran as alternatives and attempts to “squeeze” more oil out of these countries by various means. For example, Washington has already lifted several sanctions against Venezuela. The situation with Iran is more complicated because there are fewer points of contact. In the long term, Iranian oil could replace the Russian onr, especially since it is cleaner than Russian oil. It is also possible that this scenario, which was not possible a few years ago, may take place. Russian oil could enter the market under the guise of Iranian oil.
Whether the U.S. succeeds in exerting pressure on oil-exporting countries through soft power or harsh measures, the future will show. If it succeeds, everything will remain as it is; if it fails, the State Department will have to lift sanctions against Russia at least linked to oil. The only question is whether Russia will want to restore supplies, because as Russian Foreign Minister Lavrov said, Russia needs to rely only on its strength, and it will consider whether to resume a dialogue with the West in general. It is not ruled out that Russian oil will flow to the U.S. through third countries, as was previously the case with Venezuela.