US Business

Iraq exported $11.07 billion of oil last month, the highest level for half a century, as crude prices soared amid shortfall fears following Russia’s invasion of Ukraine, the oil ministry said.

The second largest producer in the Organization of the Petroleum Exporting Countries (OPEC), Iraq exported “100,563,999 barrels for revenues of $11.07 billion, the highest revenue since 1972”, the ministry said.

The figures published late Friday are preliminary data but final data “generally does not vary” much, a ministry official said, speaking on condition of anonymity.

In February, oil revenues reached an eight-year high of $8.5 billion dollars, with daily exports of 3.3 million barrels of oil.

Oil exports account for more than 90 percent of Iraq’s income.

Crude prices spiked over fears of a major supply shortfall after Moscow invaded Ukraine on February 24. Russia is the world’s second biggest exporter of oil after Saudi Arabia.

On Thursday, the OPEC group of oil producing countries and its Russia-led allies agreed on another modest oil output increase, ignoring Western pressure to significantly boost production as the Ukraine conflict has rocked prices.

The 13 members of the Saudi-led OPEC and 10 countries spearheaded by Russia — a group known as OPEC+ — backed an increase of 432,000 barrels per day in May, marginally higher than in previous months.

– ‘Two-edged sword’ –

The United States has urged OPEC+ to boost production as high energy prices have contributed to soaring inflation across the world, which has threatened to severely derail the recovery from the Covid pandemic.

While OPEC refused to budge, Washington said it would tap its strategic stockpile by a record amount in a bid to cool soaring prices.

The international benchmark contract, Brent North Sea crude, flirted with a record high in early March as it soared to almost $140 per barrel, but has retreated since then.

On Friday, oil was around $100 a barrel.

Oil revenues are critical for Iraq’s government, with the country mired in a financial crisis and needing funds to rebuild infrastructure after decades of devastating war.

Iraq, with a population of some 41 million people, is also grappling with a major energy crisis and suffers regular power cuts.

Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet its energy needs.

Neighbouring Iran currently provides a third of Iraq’s gas and electricity needs, but supplies are regularly cut or reduced, aggravating daily load shedding.

“Overall, a windfall in oil revenues is positive for Iraq,” said Yesar al-Maleki, an analyst at Middle East Economic Survey.

“But is a two-edged sword, since it may dampen government efforts to implement economic reforms needed to diversify it’s sources of income beyond oil.”

Many ordinary Iraqis are frustrated that they see little impact of the higher oil revenues trickle down to them, in a country where nearly a third live below the poverty line, according to the UN.

“With the new parliament bringing a more populist flavour of MPs, it is expected that this windfall will lead to greater calls by politicians and the public alike to increase public sector wages and employment,” Maleki added.

India and Australia signed an interim free trade deal on Saturday that cuts tariffs on billions of dollars of commerce as the two Quad partners bolster their economic ties.

Both signatories are members of the Quad alliance with the United States and Japan, which is seen as a counterweight to an increasingly assertive China.

But while they both border the Indian Ocean, Canberra says India was only Australia’s seventh-largest trading partner in 2020, and accounted for just over four percent of its exports last year. 

The Economic Cooperation and Trade Agreement was signed simultaneously in New Delhi and Canberra by India’s commerce minister Piyush Goyal and his Australian counterpart Dan Tehan in a joint ceremony.

India and Australia are “natural partners, connected by shared values of democracy, rule of law and transparency”, Goyal said. 

“Our relationship rests on the pillars of trust and reliability aptly reflected in our deepening geo-strategic engagement through the QUAD and the supply chain resilience initiative.”

Two-way trade reached around $27.5 billion last year according to New Delhi, with resource-rich Australia exporting coal and other commodities, along with sheep meat, and India largely supplying finished goods and services.

At the same time Canberra’s relations with its biggest trading partner China are at their lowest point in a generation, with many Australian goods hit with punitive sanctions and ministerial relations frozen.

Beijing has been angered at Australia’s willingness to legislate against overseas influence operations, to bar Huawei from 5G contracts and to call for an independent investigation into the origins of the coronavirus pandemic.

India and China have also seen a sharp deterioration in ties after a high-altitude clash in 2020 left 20 Indian soldiers and at least four Chinese soldiers dead.

The agreement “delivers a clear message that democracies are working together and ensuring the security and resilience of our supply chains”, Australian Prime Minister Scott Morrison said at Saturday’s signing.

India’s Prime Minister Narendra Modi added it would “contribute to increasing supply chain resilience and to the stability of the Indo-Pacific region”.

Negotiations on a comprehensive deal between India and Australia were launched more than a decade ago but stalled in 2015.

A full trade pact is now being negotiated and Morrison, who called Modi a “dear and trusted friend”, said he hoped it would be signed by the end of the year.

Saturday’s agreement cuts tariffs on more than 85 percent of Australian exports to India. 

In an accompanying statement, Morrison highlighted several products hit hard by the Chinese trade dispute — including coal, wine and rock lobsters — which will benefit under the Indian deal, calling it “a big door into the world’s fastest-growing major economy”.

His conservative government is trailing in the polls ahead of an election in May, and the tensions with China are a key issue.

India and Australia signed an interim free trade deal on Saturday that cuts tariffs on billions of dollars of commerce as the two Quad partners bolster their economic ties.

Both signatories are members of the Quad alliance with the United States and Japan, which is seen as a counterweight to an increasingly assertive China.

But while they both border the Indian Ocean, India was only Australia’s seventh-largest trading partner in 2020, and accounted for just over four percent of exports last year. 

The Economic Cooperation and Trade Agreement was signed simultaneously in New Delhi and Canberra by India’s commerce minister Piyush Goyal and his Australian counterpart Dan Tehan in a joint ceremony.

India and Australia are “natural partners, connected by shared values of democracy, rule of law and transparency”, Goyal said. 

“Our relationship rests on the pillars of trust and reliability aptly reflected in our deepening geo-strategic engagement through the QUAD and the supply chain resilience initiative.”

Two-way trade reached around $17 billion last year, with resource-rich Australia exporting sheep meat, coal and other commodities, and India largely supplying services.

At the same time Canberra’s relations with its biggest trading partner China are at their lowest point in a generation, with many Australian goods hit with punitive sanctions and ministerial relations frozen.

Beijing has been angered at Australia’s willingness to legislate against overseas influence operations, to bar Huawei from 5G contracts and to call for an independent investigation into the origins of the coronavirus pandemic.

India and China have also seen a sharp deterioration in ties after a high-altitude clash in 2020 left 20 Indian soldiers and at least four Chinese soldiers dead.

The agreement “delivers a clear message that democracies are working together and ensuring the security and resilience of our supply chains”, Australian Prime Minister Scott Morrison said at Saturday’s signing.

India’s Prime Minister Narendra Modi added it would “contribute to increasing supply chain resilience and to the stability of the Indo-Pacific region”.

Negotiations on a comprehensive deal between India and Australia were launched more than a decade ago but stalled in 2015.

A full trade pact is now being negotiated and Morrison, who called Modi a “dear and trusted friend”, said he hoped it would be signed by the end of the year.

Saturday’s agreement cuts tariffs on more than 85 percent of Australian exports to India. 

In an accompanying statement, Morrison highlighted several products hit hard by the Chinese trade dispute — like coal, wine and rock lobsters — which will benefit under the Indian deal, calling it “a big door into the world’s fastest-growing major economy”.

His conservative government is trailing in the polls ahead of an election in May, and the tensions with China are a key issue.

Wall Street stocks finished modestly higher Friday as solid US jobs data boosted expectations for more Federal Reserve interest rate hikes, while oil prices retreated after US allies agreed to tap their emergency stockpiles.

The government jobs report for March showed US employers adding 431,000 positions and the unemployment rate falling to 3.6 percent, a hair above where it was before the pandemic. 

The data showed progress in the US economic recovery, but also raised expectations of an aggressive Federal Reserve interest rate hike to tame runaway inflation.

“Given the strength of the labor market and inflation well above target, the probability that the Fed raises rates by 50 (basis points) at its next meeting in May — which is our baseline — is rising,” Daniel Vernazza of UniCredit Bank said in a note.

However, the Institute for Supply Management reported the US manufacturing sector’s expansion slowed last month amid a spike in energy prices following Russia’s invasion of Ukraine.

After a choppy session, all three major US indices finished modestly higher with the S&P 500 up 0.3 percent, lifting the index narrowly into positive territory for the week.

European equities also climbed, despite data showing eurozone inflation surged by a record 7.5 percent last month.

Analysts said soaring inflation will pressure the European Central Bank, which has thus far been reluctant to follow the Federal Reserve’s lead and lift interest rates.

“With euro-zone inflation rising even further above the ECB’s forecast, and likely to remain very high for the rest of the year, we think it won’t be long before the Bank starts raising interest rates,” said Jack Allen-Reynolds at Capital Economics.

Oil prices, meanwhile, retreated, with the US benchmark WTI contract dipping under $100 a barrel.

In a bid to ease oil prices, the 31-nation International Energy Agency agreed to tap emergency oil reserves again at an emergency ministerial meeting following a pledge to release over 60 million barrels.

The IEA, whose members include the United States, European countries, Japan and other nations allied to Washington, said it would make the new amount public early next week.

The move came a day after Biden announced a record release of oil onto the market — one million barrels of US government oil every day for six months in a bid to ease prices.

Biden described the move as a “wartime” measure that will defuse Russia’s leverage as an energy power.

Washington has pressed the OPEC+ group of oil producing countries, led by Saudi Arabia and Russia, to boost its output but the group on Thursday agreed on another modest increase instead.

The war has driven oil prices to near record heights over concerns about supplies as Russia is the world’s second biggest exporter of crude after Saudi Arabia.

– Key figures around 2100 GMT –

New York – Dow: UP 0.4 percent at 34,818.27 (close)

New York – S&P 500: UP 0.3 percent at 4,545.86 (close)

New York – Nasdaq: UP 0.3 percent at 14,261.50 (close)

London – FTSE 100: UP 0.3 percent at 7,537.90 (close)

Frankfurt – DAX: UP 0.2 percent at 14,446.48 (close)

Paris – CAC 40: UP 0.4 percent at 6,684.31 (close)

EURO STOXX 50: UP 0.4 percent at 3,918.68 (close)

Tokyo – Nikkei 225: DOWN 0.6 percent at 27,665.98 (close)

Hong Kong – Hang Seng Index: UP 0.2 percent at 22,039.55 (close)

Shanghai – Composite: UP 0.9 percent at 3,282.72 (close)

Brent North Sea crude: DOWN 0.3 percent at $104.39 per barrel

West Texas Intermediate: DOWN 1.0 percent at $99.27 per barrel

Euro/dollar: DOWN at $1.1049 from $1.1067 late Thursday

Pound/dollar: DOWN at $1.3118 from $1.3138

Euro/pound: FLAT at 84.24 pence 

Dollar/yen: UP at 122.49 yen from 121.70 yen

Amazon workers in New York voted Friday to launch the first US union at the e-commerce giant, an underdog upset against a company that has steadfastly opposed organized labor in its massive workforce. 

Dozens of supporters greeted the result with cheers and applause, while union organizer Christian Smalls popped a champagne cork in front of bank of TV cameras and photographers.

“We want to thank (Amazon founder) Jeff Bezos for going to space because while he was up there we were signing people up,” Smalls joked after workers at the Staten Island JFK8 warehouse backed the union 2,654 to 2,131 votes. 

Analysts said the Amazon outcome — likened to a David vs Goliath upset and winning plaudits from President Joe Biden — could spur other unionization effort at America’s second larget private employer. 

Amazon noted “disappointment” over the results, and said it was evaluating its options, including “filing objections based on the inappropriate and undue influence” of the National Labor Relations Board, which oversaw the vote.

At stake was Amazon’s ability to remain union-free in its home market, a status it has guarded fiercely since the company was set up in the 1990s by Bezos, who has since started a space tourism venture.

During a contentious campaign, Amazon argued that forming a union would mar the company’s direct relationship with workers and represent a jump into the unknown, with no guarantee employees will wind up with better wages or job security.

But union leaders, composed of current and former Staten Island employees, spoke constantly with employees, pitching the ability of a union to improve working conditions and ensure more employee-friendly work schedules without risk of being fired.

Smalls, 33, launched the drive soon after being fired from the Amazon site in Staten Island in March 2020 after organizing a protest for personal protective equipment amid the surge of the first major Covid-19 outbreak in New York.

“It’s a truly historic day, it really is,” said Eric Milner, who represented the union organizers during the process. “I think it’s going to start a chain reaction — warehouse to warehouse.”

Also cheering was Biden, a self-professed “union guy.” 

“The president was glad to see workers ensure their voices are heard with respect to important workplace decisions,” Press Secretary Jen Psaki said.

– Chain reaction? –

The union victory in New York came as a second election remained up in the air in the southern state of Alabama.

The vote is a redo of a 2021 ballot thrown out by federal officials, with 993 workers casting ballots against the labor group, compared with 875 employees in favor. 

But there were 416 “challenged” ballots, according to the National Labor Relations Board, meaning the number of votes still to be settled is big enough to potentially decide the final result.

The Alabama campaign had garnered support from the Retail, Wholesale and Department Store Union, a national union, and enjoyed visits by high-profile politicians such as progressive Senator Bernie Saunders. 

By contrast, the New York campaign, while based in a part of the United States historically favorable to unions, was a grass roots effort with a hardscrabble budget. 

Ruth Milkman, a sociologist of labor movements at City University of New York, said she was “stunned but delighted” by the outcome, which will “inspire” other campaigns.”

Despite recent unionization victories at Starbucks, the general picture for organized labor in the United States is mixed, with overall unionization levels falling steadily.

“It seems that most of the attention has been focused on Alabama and people kind of dismissed this one because it wasn’t an established union,” Milkman said. “And yet it turned out to be the success story.”

Neil Saunders, an analyst at GlobalData Retail, agreed that the New York victory will embolden others to unionize.

“It becomes much more difficult for Amazon to operate if they have to deal with a union,” said Saunders. “They’re not going to necessarily have to spend a lot more. It’s just that they don’t like the interference of unions.”

In the immediate near-term, Staten Island organizers were already mobilizing for their next battle: the LDJ5 sorting center across the street from the JFK8 warehouse, with a vote will be held there at the end of the month.

Also ahead, Smalls and other labor leaders will begin to focus on establishing a contract with Amazon, an objective that is expected to be challenging.

“There is still a lot of hard work ahead,” said Milkman. “Many times people win election and never get a contract.” 

Achieving a contract “will require a continued, if not expanded, campaign,” said Larry Mishel, a fellow at the Economic Policy Institute, a labor-backed think tank.

US lawmakers backed the decriminalization of marijuana nationwide in a vote Friday that will eliminate punishments for providing or possessing the drug if is signed into law by President Joe Biden.

The Democrats’ Marijuana Opportunity Reinvestment and Expungement (MORE) Act would remove its categorization as a dangerous “schedule 1” controlled substance alongside much harder narcotics that attract severe sentences, like heroin and LSD.

The bill cleared the House by 220 votes to 204, with three Republicans crossing the aisle, but analysts are skeptical about its prospects in the Senate, where Democrats would need 10 opposition lawmakers to overcome a 60-vote hurdle.

The US government is out of line with three-quarters of states that have legalized marijuana for medical use and a third of states, like California and Washington, that have freed it for recreational use, too.

“If states are the laboratories of democracy, it is long past time for the federal government to recognize that this experiment in legalization has been a resounding success,” said House Judiciary Committee Chairman Jerry Nadler, one of the bill’s sponsors.

Cannabis is one of the fastest-growing industries in the United States, with sales hitting $25 billion in 2021, according to influential cannabis website Leafly, and projected to reach $40.5 billion by 2025.

A report released in February by the Seattle-based company said the legalized cannabis industry provides work for more than 400,000 Americans and created some 280 new jobs a day last year.

California, the first state to legalize medical marijuana in 1996, made $1 billion in tax revenue in the first two years after expanding to full recreational use in 2018.

But marijuana remains illegal under federal law, posing significant hurdles for businesses that find themselves barred from accessing financial services and unable to secure loans or open bank accounts.

– ‘Shattered neighborhoods’ –

The MORE Act would provide loans to help small businesses “owned and controlled by socially and economically disadvantaged individuals,” the bill reads.

Many people arrested for marijuana use would see their records expunged, and those jailed on federal cannabis charges would have their sentences reviewed.

A federal tax would begin at five percent, with proceeds funding substance abuse treatment and legal counseling for the overwhelmingly Black communities harmed by the war on drugs.

“For over 50 years, the failed war on drugs has deepened racial injustice, shattered neighborhoods, and decimated communities,” said Aamra Ahmad, senior policy counsel at the American Civil Liberties Union.

The reform is hugely popular among Americans. A Pew Research poll found last year that 91 percent of adults think marijuana should be legal, either medically, recreationally or both.

But Republicans argue that decriminalization will increase use and create another layer of bureaucracy in the Treasury Department.

A similar bill passed the House in 2020 in a vote divided largely along party lines — but went nowhere in the then-Republican majority Senate.

Campaigners for legal reform applauded the vote, noting that Black people are almost four times as likely to be arrested for marijuana possession as whites, even though usage statistics are similar.

“Now is the time for the Senate to act on sensible reform legislation so that we can finally end the failure of prohibition and foster a well regulated marketplace for cannabis,” added Aaron Smith, the CEO of the country’s largest marijuana trade association, the National Cannabis Industry Association.

The US labor market has almost recovered from the mass joblessness caused by the pandemic, adding hundreds of thousands of positions last month and sending the unemployment rate nearly to where it was before Covid-19 broke out nationwide.

The Labor Department reported Friday that the unemployment rate fell more than analysts had predicted in March to 3.6 percent, a hair above its February 2020 level of 3.5 percent, while the economy added 431,000 jobs in the month.

Though the hiring total was slightly below analysts’ forecasts, it was nonetheless a strong figure that underscored how far the economy has come since the pandemic started two years ago.

The economy has “gone from being on the mend to being on the move,” President Joe Biden said Friday at the White House, as his administration grapples with low approval ratings driven in part by inflation, which has hit record levels during his presidency.

The economy has also added millions of jobs since Biden took office last year, but analysts said they doubted that the robust pace of hiring could be maintained.

“Today’s job report is great news as it means the economy has almost fully recovered from the blow caused by the pandemic,” Mark Zandi of Moody’s Analytics wrote on Twitter. 

“But it is somewhat disquieting in that the job market must cool off quickly, or inflation, our number one economic problem, will soon be a much bigger one.”

The data was released as the Federal Reserve undergoes a delicate process of fighting price increases by raising interest rates from the zero level they held them at when the pandemic was at its worst, while simultaneously trying not to harm the recovery.

Ian Shepherdson of Pantheon Macroeconomics said the report contains signs that wage growth — a driver of the price increases — is moderating while workforce participation is increasing, trends that could convince the Fed to be less aggressive in tightening policy.

“Rates still need to rise substantially, but the Fed won’t need to go overboard this year if the labor market is normalizing,” he said.

– Back to normal –

The latest report showed key markers of labor market health had made a full recovery after the catastrophe brought on by the pandemic, which cost more than 20 million people their jobs and sent the unemployment rate up to 14.7 percent in April 2020.

Last month, the number of unemployed people fell to six million, just above its 5.7 million level before the pandemic, while the number of people whose employment ended involuntarily or who completed a temporary job came in at 1.4 million, close to where it was in February 2020.

The Labor Department also revised upwards the healthy jobs gains reported in January and February, saying they were a combined 95,000 higher than first reported.

A wide range of industries hired last month, including leisure and hospitality, the sector encompassing the bars and restaurants hit hardest by the pandemic’s layoffs. 

That industry added 112,000 positions, while professional and business services firms gained 102,000 jobs in March, retailers added 49,000 positions and manufacturing employment rose by 38,000.

The labor force participation rate, indicating the share of people employed or looking for work, ticked up slightly to 62.4 percent, a post-pandemic high but still a percentage point below February 2020.

– Tightening to come –

Nonetheless, there was still ground to be recovered. The total number of employed people was still 1.6 million short of its pre-pandemic level, the data said, while employment in leisure and hospitality is 1.5 million jobs lower than before the pandemic.

The recovery was also not being felt equally, with unemployment for white workers hitting 3.2 percent in March, but coming in at 6.2 percent for Black Americans and 4.2 percent for Hispanic workers, though the rates for each group decreased from the month prior.

Economists viewed the data as reinforcing the Fed’s commitment to forcefully raising interest rates, perhaps by half a percentage point at its meeting next month, which would be double the increase it announced when it began hiking in March.

“The US economy has recovered the majority of the jobs lost during the pandemic and now the focus remains on how bad inflation will get, but… the Fed can go forward with aggressive tightening,” Edward Moya of OANDA said.

Amazon workers in New York voted Friday to launch the first US union at the e-commerce giant, a milestone for a company that has steadfastly opposed organized labor in its massive workforce.

Dozens of supporters cheered and clapped as the result was announced, with union organizer Christian Smalls popping a champagne cork in front of bank of TV cameras and photographers.

“We want to thank (Amazon founder) Jeff Bezos for going to space because while he was up there we were signing people up,” Smalls joked after workers at the Staten Island JFK8 warehouse backed the union 2,654 to 2,131 votes.

Amazon noted “disappointment” over the outcome, and said it was evaluating its options, including “filing objections based on the inappropriate and undue influence” of the National Labor Relations Board, which oversaw the vote.

At stake was Amazon’s ability to remain union-free in its home market, a status it has guarded fiercely since the company was set up in the 1990s by Bezos, who has since started a space tourism venture.

During the contentious campaign, the company discouraged workers from supporting unions at mandatory meetings, and through signs and other literature at the work site.

Amazon has argued that forming a union will mar the company’s direct relationship with workers and represent a jump into the unknown, with no guarantee employees will wind up with better wages or job security.

“It’s a truly historic day, it really is,” said Eric Milner, who represented the union organizers during the process. “I think it’s going to start a chain reaction — warehouse to warehouse.”

Official results were expected in the coming weeks in a union vote for an Amazon warehouse in the southern state of Alabama, but incomplete results showed organizers were not on pace to capture enough votes.

Staten Island organizers were already mobilizing for their next battle: the LDJ5 sorting center across the street from the JFK8 warehouse, with a vote will be held there at the end of the month.

– Union revival? –

The overall picture for organized labor in the United States is no better than mixed in an economy that has seen unions’ share of the American workforce steadily diminish in recent decades. 

The number of US workers who are members of a union has fallen from about 20 percent in 1983 to about 10 percent in 2021, according to the Bureau of Labor Statistics.

At Amazon, workers at a Bessemer, Alabama warehouse last year overwhelmingly voted against a unionization push supported by the Retail, Wholesale and Department Store Union.

But US worker rights agency National Labor Relations Board later called for a redo of the vote, citing what it called interference by Amazon.

In the Alabama re-vote 993 workers cast ballots against the labor group, compared with 875 employees in favor. 

But there were 416 “challenged” ballots, a “determinative” amount, according to the National Labor Relations Board, meaning the number of ballots still to be settled is big enough to potentially decide the final result.

For the Staten Island vote, a total of 8,325 workers at the JFK8 warehouse were eligible — although some no longer work at Amazon — for the vote held March 25-30. Ballots were cast by 4,852 employees.

At a news conference Thursday, union officials noted that their initial campaign last year — which received lots of media coverage and even an official endorsement by President Joe Biden — helped spur similar moves around the country.

At Starbucks, a movement to shift labor dynamics began with two cafes in upstate New York voting in December to unionize. Since then, more than 150 restaurants are at various stages of union campaigns.

The Starbucks campaign was led mostly by younger and college-educated workers who are broadly reflective of the current wave of newer labor supporters.

Union campaigns have also had recent success at museums, NGOs, media companies and universities.

But beyond those sectors, labor unions have struggled to gain a foothold, particularly in southern and some western states, whose percentage of unionized workers are less than one-third or one-fourth of those in California and New York.

Citing the need to counteract the “Putin price hike” following Russia’s invasion of Ukraine, President Biden has announced a sweeping plan to make unprecedented use of US emergency oil stockpiles.

Under Biden’s plan, the United States will release up to a million barrels a day every day for six months from its Strategic Petroleum Reserve (SPR). 

On Friday, the International Energy Agency announced that a group of 30 other countries will also release crude onto the market from strategic holdings following an emergency meeting in Paris.

Biden’s announcement Thursday prompted an immediate slump in oil prices, but the crude market was choppy on Friday, suggesting investor skepticism that the emergency releases will change the picture.

Below are some of the main questions about the SPR and the likely impact of the policy.

– What is the Strategic Petroleum Reserve ? –

Set up in 1975 following the 1973 Arab oil embargo, the SPR is maintained in immense salt caverns along the Gulf of Mexico. The IEA requires members to hold 90 days of import protection, a requirement the United States has traditionally met with SPR and industry stocks.

At its peak, the SPR contained 727 million barrels in December 2009. The level stood at 568 million barrels as of last week, according to government data.

If the United States goes forward with Biden’s plan, it would reduce the SPR to levels not seen since the mid-1980s.

– How does Biden’s plan compare with past uses?

The White House’s plan dwarfs previous SPR releases, which included President George H.W. Bush ordering about 17 million barrels released during the first Gulf War in 1991 and a 2011 release by President Barack Obama of 30.6 million barrels due to the disruption of Libyan production.

The announcement marks Biden’s third move to tap the SPR. 

In November, the United States announced it was putting out 50 million barrels of oil in response to soaring inflation amid pandemic-exacerbated supply chain snarls. Early last month, Washington also joined a 60 million emergency release announced by the IEA to address disruption from the Russian invasion.

Given the scale of the release, some analysts have said Energy Department officials may have trouble finding buyers for crude, or face infrastructure bottlenecks. A note from JPMorgan Chase predicted the release would add 850,000 barrels per day, rather than one million,

Bill O’Grady, chief market strategist at Confluence Investment Management, said that the move comes as the long-term need for so much stockpiling looks less acute because of decarbonization efforts to address climate change and as the US shale boom has lessened the need for imports.

“I don’t think that oil will ever be replaced,” O’Grady said.

– Will it bring down prices? –

Oil prices ended about three percent lower on Thursday following the official announcement after falling even more on the initial reports about the plan.

“The market reacted immediately after the announcement was made,” said Andy Lipow of Lipow Oil Associates in Houston, who thinks gasoline prices will fall 10 to 15 cents a gallon due to the SPR release.

The move comes as the US president faces long odds in the November midterm elections, as runaway consumer prices weigh threaten to overshadow a strong labor market.

Biden described the policy as meant to “ease the pain” of lofty gas prices, which now stand above $4.20 a gallon, up almost 50 percent from last year.

But now that the announcement has been priced in, “the market will look to the next headline for direction,” Lipow said.

“It’s like a quick fix,” said Jim Krane, a fellow at Rice University’s Baker Institute for Public Policy.

The quantity of oil is more than twice the increased output just offered by the OPEC+ group of exporters, and will “give us some relief,” said Krane.

But the extended nature of the SPR plan could blunt some of the longer-term impact if US shale producers defer investments in new drilling, or OPEC opts against shifting from its current austerity posture.

Biden has almost no other levers for lowering oil prices, said Krane, who notes “the US does not have a national oil company that takes orders from the government.”

Oil prices were already elevated prior to the Ukraine invasion, but Russia’s attack prompted crude prices to spike to almost $140 a barrel in early March after the United States banned Russian energy imports — not far from their all-time high.

While other oil importing countries have not followed the US lead, some analysts have estimated that as much as three million barrels a day may be sidelined by crude buyers “self sanctioning,” adding to uncertainty in a period when inventories lag historic levels.

Stock markets wavered on Friday as a solid US jobs report raised expectations of an aggressive US interest rate hike to tame runaway inflation.

Oil prices, meanwhile, fell slightly, with the US benchmark WTI contract dipping under $100 as US allies agreed to tap their emergency stockpiles again in a bid to calm the market.

While Russia’s war in Ukraine remains at the forefront of investor concerns, they were also tracking the latest US jobs picture as it serves as a barometer of the health of the world’s biggest economy.

The United States added 431,000 jobs in March and the unemployment rate fell to 3.6 percent, bringing the labour market closer to where it was before the Covid-19 pandemic began, according to official data.

The figures also fed into expectations of the next move by the US Federal Reserve, which has begun to raise interest rates in a bid to rein in a surge in inflation that has threatened to derail the economic recovery from the pandemic.

Higher rates, however, can also put the brakes on economic growth.

Analysts said they now expect the Fed to enact a half-point rate hike in May, higher than the quarter-point increase decided at its last meeting.

“The employment report showed strong jobs growth, a lower unemployment rate, and sustained wage inflation — a recipe for the Fed to issue a 50-basis-point hike next month,” market analysis firm Briefing.com said in a note.

Wall Street fell in midday trading after opening on a high note, but European equities finished the day in positive territory while Asian markets were mixed to end the week.

“This continues to be a very headline-driven market and they’re coming thick and fast,” said Craig Erlam, senior market analyst at OANDA foreign exchange platform.

“Talks between Ukraine and Russia are progressing well, it seems, but things can change rapidly, for better or worse. Until we see a deal, the situation will continue to feel precariously balanced and investors will remain on edge as a result,” he said.

Fallout from the war sent consumer prices in the eurozone surging by a record 7.5 percent, EU statistics agency Eurostat said heading into the weekend.

– IEA emergency meeting –

In a bid to ease oil prices, the 31-nation International Energy Agency agreed to tap emergency oil reserves again at an emergency ministerial meeting following a pledge to release over 60 million barrels.

The IEA, whose members include the United States, European countries, Japan and other nations allied to Washington, said it would make the new amount public early next week.

US President Joe Biden said that the countries had agreed to release “tens of millions of additional barrels of oil onto the market”.

“The IEA Ministers reiterated their concerns about the energy security impacts of the egregious actions by Russia and voiced support for sanctions imposed by the international community in response,” the group said in a statement.

The announcement came a day after Biden announced a record release of oil onto the market — one million barrels of US government oil every day for six months in a bid to ease prices.

Biden described the move as a “wartime” measure that will defuse Russia’s leverage as an energy power.

Washington has pressed the OPEC+ group of oil producing countries, led by Saudi Arabia and Russia, to boost its output but the group on Thursday agreed on another modest increase instead.

The war has driven oil prices to near record heights over concerns about supplies as Russia is the world’s second biggest exporter of crude after Saudi Arabia.

– Key figures around 1630 GMT –

New York – Dow: DOWN 0.2 percent at 34,609.91 points

London – FTSE 100: UP 0.3 percent at 7,537.90 (close)

Frankfurt – DAX: UP 0.2 percent at 14,446.48 (close)

Paris – CAC 40: UP 0.4 percent at 6,684.31 (close)

EURO STOXX 50: UP 0.6 percent at 3,927.44

Tokyo – Nikkei 225: DOWN 0.6 percent at 27,665.98 (close)

Hong Kong – Hang Seng Index: UP 0.2 percent at 22,039.55 (close)

Shanghai – Composite: UP 0.9 percent at 3,282.72 (close)

Brent North Sea crude: DOWN 0.5 percent at $104.20 per barrel

West Texas Intermediate: DOWN 1.0 percent at $99.26 per barrel

Euro/dollar: DOWN at $1.1046 from $1.1067 late Thursday

Pound/dollar: DOWN at $1.3111 from $1.3143

Euro/pound: UP at 84.25 pence from 84.20 pence

Dollar/yen: UP at 122.60 yen from 121.69 yen