On Monday, the Biden administration announced it will follow through with the scheduled sale of 26 million barrels of crude oil drawn from the Strategic Petroleum Reserve (SPR). The decision was announced shortly after Russia announced production cuts of a half million barrels per day in response to the newest batch of Western sanctions levied against the Russian energy industry.

Congress mandated the release as part of budget directives enacted in 2015 for the present fiscal year, according to a spokesperson for the US Department of Energy. The Biden administration had sold a record 180 million barrels of crude oil drawn from the SPR last year as the administration tried to reduce historically high prices of gasoline and other petroleum products.

It had been reported the Department of Energy was previously looking for ways to cancel this year’s scheduled 26 million barrel sale, so that it could begin to refill the depleted reserves. Last year’s historic draw reduced the total reserves to a mere 371 million barrels, putting the reserve at its lowest level since 1983. The new sale will further deplete the reserves down to about 345 million barrels.

Phil Flynn, an analyst at Price Futures Group, said, “Biden is front-loading SPR barrels to avoid a summer gasoline price spike,” adding, “there are growing concerns among the Biden administration that gas prices are headed back to $4 a gallon and the president is fearful of the political heat he will have to take.” 

The decision to allow the release comes after a Russian announcement that the Kremlin will reduce oil production by 500,000 barrels per day, a 5% reduction, in retaliation for sanctions imposed on Russia in response to the invasion of Ukraine. Some analysts believe the current release was allowed in an attempt to offset Russia’s production cut.

The US had announced it would refill the reserve once the price had dropped to a relatively stable $70 per barrel, however before any contracts could be issued, oil surged back to $80 per barrel.

Many analysts think the significance of Russia’s production cut is not being appreciated, coming just as there is an economic recovery and China’s economy is about to come back online, increasing the demand from the world’s second largest economy, and its largest oil importer.