hurricanes later this year could damage Gulf Coast refineries and pipelines, choking off supplies.

For now, though, the steady drop in the cost of fuel offers Americans a reprieve.

“If gasoline prices stay at or near the levels they have reached, that would mean much more cushion for households,” Ms. Bovino said.

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U.S. Stocks Rise As More Big Companies Report Solid Earnings

By Associated Press
August 3, 2022

Oil prices are steady after the OPEC oil cartel and its allies decided to boost production in September by a much slower pace than in previous months.

Stocks rose in afternoon trading on Wall Street Wednesday as investors reviewed another, mostly encouraging, batch of earnings from several big companies.

The S&P 500 rose 1.3% as of 12:01 p.m. Eastern. The Dow Jones Industrial Average rose 330 points, or 1%, to 32,732 and the Nasdaq rose 2.1%. The gains helped indexes recover most of this week’s losses. Technology companies, retailers and communications companies were some of the biggest winners. Sectors considered less risky, such as utilities and consumer goods makers, lagged the broader market.

Wall Street also received a surprisingly good report on a key part of the economy. The services sector, which makes up the bulk of the U.S. economy, unexpectedly grew in July, according to the Institute for Supply Management.

The yield on the 10-year Treasury rose to 2.78% from 2.73% late Tuesday.

Earnings remain in focus this week as investors parse the latest results and statements from companies to better understand how inflation is affecting businesses and consumers.

Drugstore chain CVS rose 5.5% after reporting solid financial results and raising its profit forecast for the year. Starbucks rose 3.2% after also reporting solid financial results. Nearly three-quarters of companies within the benchmark S&P 500 have reported earnings for the latest quarter and the results have mostly beaten analysts’ forecasts.

Several companies, though, have slipped amid disappointing results. Taco Bell owner Yum Brands fell 2.6% following a weak earnings report and online dating service company Match Group lost about a fifth of its value after giving investors a weak financial forecast.

PayPal jumped 9.6% on a report that activist investor Elliott Management has taken a large stake in the payment company.

Robinhood Markets, whose stock trading app helped bring a new generation of investors to the market, rose 14.2% following an announcement that it’s cutting nearly a quarter of its workforce. Crashing cryptocurrency prices and a turbulent stock market have kept more customers off its app.

Oil prices remained mostly steady following OPEC’s decision to boost production in September at a much slower pace than previous months.

Markets are also watching for potential economic fallout from China after U.S. House Speaker Nancy Pelosi’s visit to Taiwan. China claims self-ruled Taiwan as part of its territory, and banned imports of Taiwanese citrus fruits and frozen fish in retaliation for Pelosi’s visit. But it has avoided disrupting the flow of computer chips and other industrial goods, a step that could jolt the global economy.

Upcoming data on the jobs market could help investors determine how the Federal Reserve will move ahead with its interest rate policy, which has been aggressive in an effort to try and tame inflation. U.S. jobless claims numbers for last week will be released Thursday, and the government issues its July jobs report on Friday.

Additional reporting by The Associated Press.

Source: newsy.com

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Biden fails to secure major security, oil commitments at Arab summit

  • Biden says U.S. will remain committed to allies
  • U.S. hoping to integrate Israel
  • Saudi crown prince pushes back on human rights issue

JEDDAH, Saudi Arabia, July 16 (Reuters) – President Joe Biden told Arab leaders on Saturday that the United States would remain an active partner in the Middle East, but he failed to secure commitments to a regional security axis that would include Israel or an immediate oil output rise.

“The United States is invested in building a positive future of the region, in partnership with all of you—and the United States is not going anywhere,” he said, according to a transcript of his speech.

Biden, who began his first trip to the Middle East as president with a visit to Israel, presented his vision and strategy for America’s engagement in the Middle East at an Arab summit in Jeddah.

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The summit communique was vague, however, and Saudi Arabia, Washington’s most important Arab ally, poured cold water on U.S. hopes the summit could help lay the groundwork for a regional security alliance – including Israel – to combat Iranian threats.

During a meeting with Saudi Crown Prince Mohammed bin Salman, Biden raised the highly sensitive issue of human rights, drawing countercriticism from the crown prince, also known as MbS.

“We believe there’s great value in including as many of the capabilities in this region as possible and certainly Israel has significant air and missile defence capabilities, as they need to. But we’re having these discussions bilaterally with these nations,” a senior administration official told reporters.

A plan to connect air defence systems could be a hard sell for Arab states that have no ties with Israel and balk at being part of an alliance seen as against Iran, which has a strong regional network of proxies including Iraq, Lebanon and Yemen.

Saudi Arabia’s foreign minister, Prince Faisal bin Farhan Al Saud, said he was not aware of any discussions on a Gulf-Israeli defence alliance and that the kingdom was not involved in such talks.

He told reporters after the U.S.-Arab summit that Riyadh’s decision to open its airspace to all air carriers had nothing to do with establishing diplomatic ties with Israel and was not a precursor to further steps. read more

Biden has focused on the summit with six Gulf states and Egypt, Jordan and Iraq, while downplaying the meeting with MbS which drew criticism in the United States over human rights concerns.

Biden had said he would make regional power Saudi Arabia a “pariah” on the global stage over the 2018 murder of journalist Jamal Khashoggi by Saudi agents, but ultimately decided U.S. interests dictated a recalibration, not a rupture, in relations with the world’s top oil exporter.

The crown prince told Biden that Saudi Arabia had acted to prevent a repeat of mistakes like the killing of Khashoggi and that the United States had also made mistakes, including in Iraq, a Saudi minister said.

FIST BUMP

Biden exchanged a fist bump with MbS on Friday but said he told him he held him responsible for Khashoggi’s murder at the Saudi consulate in Istanbul.

“The President raised the issue … And the crown prince responded that this was a painful episode for Saudi Arabia and that it was a terrible mistake,” said Saudi Minister of State for Foreign Affairs Adel al-Jubeir.

The accused were brought to trial were and being punished with prison terms, he said.

U.S. intelligence agencies believe the crown prince ordered Khashoggi’s killing, which he denies.

Jubeir, talking to Reuters about Friday’s conversation, said MbS had made the case that trying to impose values on other countries by force could backfire.

“It has not worked when the U.S. tried to impose values on Afghanistan and Iraq. In fact, it backfired,” Jubeir quoted the crown prince as telling Biden. “Countries have different values and those values should be respected!”

The exchange highlighted tensions that have weighed on relations between Washington and Riyadh, its closest Arab ally, over issues including Khashoggi, oil prices and the Yemen war.

Biden needs the help of OPEC giant Saudi Arabia at a time of high crude prices and other problems related to the Russia-Ukraine conflict. Washington also wants to curb Iran’s sway in the region and China’s global influence.

Biden came to Saudi Arabia hoping to reach a deal on oil production to help drive down gasoline prices that are driving inflation above 40-year highs and threatening his approval ratings.

He leaves the region empty-handed but hoping the OPEC+ group, comprising Saudi Arabia, Russia and other producers, will boost production at a meeting on Aug. 3.

“I look forward to seeing what’s coming in the coming months,” Biden said.

FOOD SECURITY

A second senior administration official said Biden would announce that Washington has committed $1 billion in new near- and long-term food security assistance for the Middle East and North Africa, and that Gulf states would commit $3 billion over the next two years in projects that align with U.S. partnerships in global infrastructure and investment.

Gulf states, which have refused to side with the West against Russia over Ukraine, are seeking a concrete commitment from the United States to strategic ties that have been strained over perceived U.S. disengagement from the region.

Riyadh and Abu Dhabi have been frustrated by U.S. conditions on arms sales and at their exclusion from indirect U.S.-Iran talks on reviving a 2015 nuclear pact they see as flawed for not tackling concerns about Iran’s missile programme and behaviour.

Israel had encouraged Biden’s trip to Saudi Arabia, hoping it would lead to warmer ties between it and Riyadh as part of a wider Arab rapprochement.

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Additional reporting by Maha El Dahan in Jeddah and John Irish in Paris Writing by Ghaida Ghantous and Michael Georgy
Editing by Timothy Heritage and Helen Popper

Our Standards: The Thomson Reuters Trust Principles.

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Biden ends trip with U.S.-Saudi relations on the mend but few other wins

JEDDAH, Saudi Arabia, July 16 (Reuters) – President Joe Biden and Saudi Crown Prince Mohammed bin Salman took a step to mending their troubled relationship with a fist bump, but the U.S. leader left the kingdom on Saturday with few big successes and doubts as to whether the visit was worth it.

Biden’s four-day trip to Israel and Saudi Arabia, his first to the Middle East as president, aimed to reset ties with the Gulf Arab oil giant, demonstrate U.S. commitment to the region and counter the rising influence of Iran, Russia and China.

But thorny optics overshadowed the Saudi leg as Biden avoided appearing to embrace a crown prince implicated by U.S. intelligence in the brutal 2018 murder of Washington Post journalist Jamal Khashoggi, a charge Saudi authorities deny.

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Biden said he confronted Prince Mohammed, known as MbS, over the killing. MbS remained unbowed, telling Biden the United States had also made mistakes. read more

Though Biden left the Middle East without securing an immediate pledge by Saudi Arabia to boost oil output or public support for U.S. efforts for a regional security axis that would include Israel, the trip was not a wash. read more

Biden’s fist bump with Prince Mohammed in front of the royal palace in Jeddah will serve as the defining image of the trip, but it was months in the making. White House officials were divided over rewarding MbS with a visit and agonized over how it would look.

In the end, they decided that keeping strategic ties with Saudi Arabia that have weathered 80 years was important for U.S. interests and would help the two sides turn the page.

Riyadh took several important steps to pave a path for the visit, including backing a U.N.-brokered truce in the Yemen conflict, a big victory for Biden, who pulled U.S support for Saudi-led offensive operations. It also helped accelerate already approved boosts in oil production through OPEC+.

“The summit of the nine Arab leaders is a clear accomplishment as is the backing for the truce in Yemen. But these accomplishments have come at the cost of the fist bump,” said Bruce Riedel, a foreign policy fellow at the Brookings Institution.

Biden came to Saudi Arabia hoping to convince the OPEC heavyweight to boost oil production, but the kingdom held firm on its strategy that it must operate within the framework of the OPEC+ alliance, which includes Russia, and not act unilaterally.

High gasoline prices have fueled a surge in inflation in the United States and globally, dragging down Biden’s poll numbers as he heads into critical congressional elections in November.

However, White House officials are confident their diplomatic efforts will help shape the conversation when OPEC+ members hold their next meeting.

“All eyes are on the August 3 OPEC+ meeting. If the Saudis and the UAE want to raise output, they will do it via OPEC+. But we have to keep in mind the demand picture is softening. I’m not sure these countries are convinced the market needs more crude supply,” said Ben Cahill, an energy analyst at the Center for Strategic and International Studies.

ISRAELI-SAUDI RELATIONS

The trip saw a small warming of relations between Saudi Arabia and Israel after Riyadh said it would open its airspace to all air carriers, paving the way for more overflights to and from Israel.

There was also a U.S.-brokered deal between Israel, Egypt and Saudi Arabia under which a small U.S.-led international peacekeeping contingent would quit the strategic island of Tiran, control of which was ceded to Riyadh by Cairo in 2017.

The United States and Israel hope those moves and the summit could help build momentum toward Israel’s further integration into the region, including with Saudi Arabia. read more

But the Saudi foreign minister poured cold water over any imminent normalization with Israel, saying this was not a precursor to further steps. He said Riyadh was not part of any discussions on a Gulf-Israeli defense alliance to counter Iran.

On Thursday, the U.S. and Israel signed a joint pledge on Thursday to deny nuclear arms to Iran, a show of unity by allies long divided over diplomacy with Tehran. The declaration was part of Biden’s efforts to rally regional allies around U.S. efforts to revive a 2015 nuclear pact with Iran.

Saudi Arabia and Israel were not happy with the original nuclear deal brokered by former President Barack Obama’s administration and celebrated when Biden’s predecessor, Donald Trump, quit the pact.

Now, Biden is asking for patience, assuring them that the United States is willing to use force as a last resort if talks fail and Iran continues what the West believes is a program to develop nuclear weapons. Tehran denies it is seeking a nuclear weapon.

Saudi Arabia and the UAE want regional concerns over Iran’s missile program and regional proxies to be addressed.

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Reporting by Jarrett Renshaw; Editing by Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

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Saudi crown prince says unrealistic energy policies will lead to higher inflation

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Saudi Crown Prince Mohammed bin Salman attends an Arab summit, in Jeddah, Saudi Arabia, July 16, 2022. REUTERS/Evelyn Hockstein

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JEDDAH, Saudi Arabia, July 16 (Reuters) – Saudi Arabia’s Crown Prince Mohammed bin Salman said on Saturday more investment was needed in fossil fuel and clean energy technologies to meet global demand, and that unrealistic emission policies would lead to unprecedented levels of inflation.

The prince said Saudi Arabia had announced raising its production capacity to 13 million barrels per day by 2027 from a nameplate capacity of 12 million now and “after that the Kingdom will not have any more capability to increase production”.

He was addressing a U.S.-Arab summit in Jeddah attended by President Joe Biden, who is eager to see Saudi Arabia and its OPEC partners pump more oil to help bring down the high cost of gasoline and ease the highest U.S. inflation in four decades.

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“Adopting unrealistic policies to reduce emissions by excluding main sources of energy will lead in coming years to unprecedented inflation and an increase in energy prices, and rising unemployment and a worsening of serious social and security problems,” Prince Mohammed said.

The de facto ruler of the world’s top oil exporter said COVID-19 and the “geopolitical situation” necessitated more joint efforts to support the global economy and that the transition to sustainable energy sources required a “realistic and responsible” approach.

The summit gathered Biden with leaders from six Gulf Arab states and Egypt, Jordan and Iraq. Biden held bilateral talks with Saudi leaders on Friday in Jeddah.

U.S. officials have said Biden would discuss energy security with leaders of Gulf oil producers and hopes to see more action by OPEC+ to boost output, but there was unlikely to be any bilateral announcements from the talks.

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Reporting by Ghaida Ghantous and Maha El Dahan
Editing by Mark Potter and Clelia Oziel

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What Happened on Day 99 of the War in Ukraine

As the war in Ukraine approaches its 100th day, President Volodymyr Zelensky said on Thursday that Russian forces now control one-fifth of the country, a blunt acknowledgment of the slow but substantial gains that Moscow has made in recent weeks.

Though battered, depleted and repulsed from their initial drive to capture the Ukrainian capital of Kyiv, Russian troops have used their superior artillery power to grind closer to their goal of taking over the eastern regions of Luhansk and Donetsk, known collectively as the Donbas, where Kremlin-backed separatists have been fighting Ukrainian troops since 2014.

Mr. Zelensky said Russia had expanded its control of Ukrainian territory from an area roughly the size of the Netherlands before the invasion began to an area now greater than the Netherlands, Belgium and Luxembourg combined. Seizing that swath of land could give President Vladimir V. Putin of Russia huge leverage in any future talks to end the war, as well as a base of operations to launch further attacks inside Ukraine.

Yet momentum in the war can shift quickly and unpredictably. As Russia has pounded targets in the east, Ukrainian forces have regained control of 20 small towns and villages in a counteroffensive in the south of the country, a regional official, Hennadiy Lahuta, said on national television.

Credit…Finbarr O’Reilly for The New York Times

Fighting was raging, Mr. Zelensky said, along a roughly 620-mile-long, crescent-shaped front that stretches from around the northeastern city of Kharkiv to the outskirts of Mykolaiv, near the Black Sea, in the south.

“If you look at the entire front line, and it is, of course, not straight, this line is more than a thousand kilometers,” Mr. Zelensky said in a video address to the Parliament of Luxembourg. “Just imagine! Constant fighting, which stretched along the front line for more than a thousand kilometers.”

Amid intense battles and heavy losses suffered by both the Russian and Ukrainian armies, the arrival of more sophisticated and powerful weapons from Western nations could alter the dynamic on the battlefield.

President Biden this week promised to send Ukraine advanced rocket systems that can target enemy positions from nearly 50 miles away, and Chancellor Olaf Scholz of Germany pledged to ship a sophisticated air defense system and a tracking radar capable of pinpointing Russian artillery.

For now, Moscow’s main military target is Sievierodonetsk, the last major city in the Luhansk region that is not in Russian hands. Russian forces have shelled the area for weeks, reducing much of the city to depopulated rubble.

Russia controls about 70 percent of the city, although a regional official said on Thursday that Ukrainian troops had forced Russian soldiers back from several streets amid fierce urban combat.

Credit…Finbarr O’Reilly for The New York Times

Russian forces have renewed assaults to the west of the city in an effort to sever a Ukrainian supply line along a highway and side roads that the Ukrainians have called the “road of life,” the Institute for the Study of War, a Washington research group, said in an assessment.

“The Russian army is trying to break through the defenses of the armed forces of Ukraine,” Serhiy Haidai, the military governor of the Ukrainian-controlled portions of the Luhansk region, wrote on Telegram.

“Now, the main goal for them is Sievierodonetsk, but they had no success overnight,” he wrote.

Military analysts have viewed the Ukrainian army’s decision to hold out in the city as a risky maneuver. It allows the Ukrainians to inflict casualties on Russian troops but could also result in heavy losses for Ukrainian soldiers, who have been besieged by relentless artillery fire.

Mr. Zelensky said that more than 14,000 Ukrainian civilians and service members had been killed in conflict with Russia since 2014, when it seized Crimea. More than 8 million Ukrainians have been internally displaced since Russia’s invasion in February, and more than 6.5 million have fled to other countries as refugees, according to the United Nations.

In his nightly address to the nation Thursday, Mr. Zelensky said that more than 200,000 children had been deported since the invasion began. He called the deportations “one of Russia’s most heinous war crimes.”

“These are orphans from orphanages. Children with parents. Children separated from their families,” Mr. Zelensky said. “The Russian state disperses these people on its territory, settles our citizens, in particular, in remote regions. The purpose of this criminal policy is not just to steal people, but to make deportees forget about Ukraine and not be able to return.”

Credit…Maciek Nabrdalik for The New York Times

Russia has denied that people are being forced to leave Ukraine, saying that the 1.5 million Ukrainians now in Russia were evacuated for their own safety. On Thursday, the Russian Defense Ministry said that over the past 24 hours, 18,886 people had been evacuated from eastern Ukraine, including 2,663 children.

American officials have rejected Russia’s claims that it has been offering Ukrainians humanitarian relief by moving them to Kremlin-controlled territory.

“As many eyewitness accounts have described in detail, Russia is subjecting many of these civilians to brutal interrogations in so-called filtration camps,” Michael Carpenter, the United States ambassador to the Organization for Security and Cooperation in Europe, said in a speech this month in Vienna.

Raising the issue again this week, he said: “Local residents who try to escape Russia’s reign of fear and brutality risk abduction and forced deportation to Russia or Russia-held areas.”

Russia has not released casualty figures for its troops since late March, when it said 1,351 soldiers had died. Mr. Zelensky said Ukrainian officials believe that at least 30,000 Russian troops have been killed. In late March, NATO estimated that 7,000 to 15,000 Russian troops had been killed.

In an effort to isolate and punish Mr. Putin and his allies for having launched the invasion, the Biden administration on Thursday announced a new set of sanctions aimed at freezing the shadowy network of international assets that Mr. Putin and members of his inner circle use to hide their wealth.

Among the targets were four yachts linked to the Russian leader: the Shellest, the Nega, the Graceful and the Olympia. Mr. Putin has used some of the vessels for ocean excursions, including one outing last year on the Black Sea with Aleksandr G. Lukashenko, the strongman leader of Belarus, who has supported the invasion of Ukraine, the administration said.

Credit…Nicole Tung for The New York Times

The sanctions also targeted several prominent members of the Russian elite, including Sergei Roldugin, a cellist, conductor and artistic director of the St. Petersburg Music House, whom the administration called a close Putin associate, godfather to one of Mr. Putin’s daughters and custodian of the Russian president’s offshore wealth.

Mr. Roldugin was added to the European Union’s sanctions list in late February, days after Russia’s invasion of Ukraine. He has been described as “Putin’s wallet.”

Following a drop in Russian oil exports caused in part by Western sanctions, a group of oil-producing nations known as OPEC Plus agreed on Thursday to raise production levels in July and August. The agreement followed months of lobbying by the White House, but analysts said it was too slight to ease high gas prices that have posed a political challenge for Democrats in the midterm elections.

OPEC Plus, which includes Russia, Saudi Arabia and other major oil producers, announced the plan to increase production just days after the European Union agreed to ban most imports of Russian oil, imposing a harsh penalty on Moscow that also threatened to drive European energy costs higher.

As E.U. negotiators finalized the details of the oil embargo and other sanctions against Russia, they made a change at the insistence of Hungary, removing from the sanctions list Patriarch Kirill I, the leader of the Moscow-based Russian Orthodox Church, who has been accused of offering spiritual cover for the invasion of Ukraine.

Reporting was contributed by Matina Stevis-Gridneff, Julian E. Barnes, Michael Forsythe, Stanley Reed and Andrew E. Kramer.

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Ukraine Live Updates: Biden Taps U.S. Oil Reserves as War Disrupts Supply

Under growing pressure to bring down high energy prices, President Biden announced on Thursday that the United States would release up to 180 million barrels of oil from a strategic reserve to counteract the economic impact of Russia’s invasion of Ukraine.

With midterm elections just months away, gasoline prices have risen nearly $1.50 a gallon over the last year, undercutting consumer confidence. And the cost of diesel, the fuel used by most farmers and shippers, has climbed even faster, threatening to push up already high inflation on all manner of goods and services.

“I know how much it hurts,” Mr. Biden said Thursday as he announced the plan. “As you’ve heard me say before, I grew up in a family like many of you where the price of a gallon gasoline went up, it was a discussion at the kitchen table.”

Mr. Biden has few tools to control commodity prices that are set on global markets, so he is turning to the Strategic Petroleum Reserve, ordering the largest release since that emergency stockpile was established in the early 1970s. But the move will most likely have a modest impact because it cannot make up for all the oil, diesel and other fuels that Russia used to sell to the world but is no longer able to.

“Our prices are rising because of Putin’s action,” Mr. Biden added, referring to President Vladimir V. Putin of Russia. “There isn’t enough supply. And the bottom line is if we want lower gas prices, we need to have more oil supply right now.”

Mr. Biden’s plan, to release one million barrels of oil a day for 180 days, would represent roughly 5 percent of American demand and 1 percent of global demand. To put that in context, Russian oil exports are down about three million barrels a day. The U.S. benchmark oil price fell about 6 percent on Thursday.

The administration’s announcement came as Russia conveyed mixed signals about its aims for the war in Ukraine, now in its sixth week. Despite Kremlin claims that it was withdrawing from the outskirts of Kyiv, the capital, fighting continued in that area on Thursday, and Western officials said they saw little evidence of a Russian pullback.

“Russia maintains pressure on Kyiv and other cities, so we can expect additional offensive actions, bringing even more suffering,” the NATO secretary general, Jens Stoltenberg, said at a news conference.

Russian officials also said they would allow a respite for greater humanitarian access to the devastated southeast port of Mariupol, once home to 400,000 people, which has come to symbolize Russia’s battlefield tactic of indiscriminate destruction. Previous agreements for pauses in fighting around Mariupol have repeatedly broken down.

Largely as a result of the ceaseless war, energy experts expect oil prices to stay high for a while without big interventions like the U.S. reserve release.

Reaction from the oil industry to Mr. Biden’s announcement was muted. The reserve has mostly been used to increase the supply of oil during wars, foreign threats to energy supplies or natural disasters. Smaller reserve releases by the Biden administration starting late last year have had little impact on the prices that drivers and businesses pay for fuel.

“It will lower the oil price a little and encourage more demand,” said Scott Sheffield, chief executive of Pioneer Natural Resources, a major Texas oil company. “But it is still a Band-Aid on a significant shortfall of supply.”

The American Petroleum Institute, which represents oil and gas companies, said Mr. Biden ought to encourage domestic oil production by reducing regulations. The reserve “was put in place to reduce the impact of significant supply chain disruptions,” said Mike Sommers, the group’s president, “and while today’s release may provide some short-term relief, it is far from a long-term solution to the economic pain Americans are feeling at the pump.”

After sinking to historically low levels during the early months of the coronavirus pandemic, oil prices have been climbing for the last year, reaching their highest levels in nearly a decade.

Oil exploration and production in the United States and elsewhere slid during the pandemic, and still has not quite recovered. American companies, under pressure from investors, have been cautious about spending too much money to drill new wells, lest prices fall again. Instead, many have been paying out larger dividends and buying back their stock.

While that calculation might make sense for individual businesses, it has caused political problems for Democrats who had hoped to reduce the use of fossil fuels to address climate change. Now, under attack from Republicans for high prices, Mr. Biden and Democrats are trying to get the oil industry to drill more.

Credit…Tannen Maury/EPA, via Shutterstock

Both sides of the political divide are eyeing the November congressional election, when inflation is expected to be a major issue.

Reacting to news of the release from the reserve, a spokesman for Representative Kevin McCarthy, the Republican leader in the House, accused the president of “attacks on American energy production in order to fulfill his campaign promise to ‘get rid of fossil fuels.’”

Mark Bednar, the spokesman, added: “As a result, the American people are paying the price, as gas is more than $4 per gallon, and we are more reliant on other countries for energy.”

But Senator Joe Manchin III, Democrat of West Virginia, welcomed the Biden announcement, saying it would “provide much-needed relief while also allowing for the simultaneous ramping up of domestic oil and gas production to backfill Russian energy resources.”

Aides to Mr. Biden are hoping to blunt Republican criticisms by taking actions to try to lower prices. In a statement about the oil release Thursday morning, the White House said that Mr. Biden was “committed to doing everything in his power to help American families who are paying more out of pocket as a result.”

They are also trying to pin some of the blame for high prices on oil companies, which the administration argues are not producing more energy to increase their profits. The administration plans to call on Congress to require companies to produce oil on more than 12 million acres of federal lands that are already permitted for extraction or pay fines, a proposal that will probably face an uphill climb.

Energy experts said the reserve release would pack more punch if other countries, like China, also sold oil from their stockpiles. The International Energy Agency, an organization of more than 30 countries, will meet Friday and may recommend further releases from national reserves.

Russian oil exports normally represent more than one of every 10 barrels the world consumes. The United States, Britain and Canada have stopped importing Russian oil, and many oil companies and shippers in Europe have voluntarily stopped buying Russia’s energy products. That has produced a deficit so far of about three million barrels a day.

The average price of regular gasoline in the United States is $4.23 a gallon, according to AAA, the motor club. That’s about the same as it was a week ago but up 62 cents a gallon in the last month.

Oil prices had dropped this week after peace talks between Russia and Ukraine showed the first signs of progress. Energy traders are also concerned that demand could fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai and other places to deal with coronavirus outbreaks.

“The price effect is likely to be short term,” David Goldwyn, who was a senior State Department official in the Obama administration, said about Mr. Biden’s announcement. “But part of the benefit of this release is that it will provide a bridge to when new physical supply comes online in the second half of this year from the U.S., Canada, Brazil and other countries.”

Some environmentalists criticized the reserve release. “Putting more oil on the market is not the solution to our problem but the perpetuation of our problem,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund.

But Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s Kennedy School, said releasing reserves to ease shortages would not imperil the transition to clean energy. “What the last month has told us is that if there is no energy security today, the appetite for taking hard steps on the path of transition will evaporate,” she said.

The release is not without risk. Goldman Sachs analysts wrote in a research note that a large discharge could cause “congestion” on the Gulf Coast, keeping new oil production from fields in West Texas out of pipelines and storage tanks.

Mr. Biden’s move could also discourage Saudi Arabia and other producers from increasing supply to reduce prices. OPEC Plus, a group led by Saudi Arabia that includes Russia, on Thursday decided to maintain a policy of only modestly increasing supply.

Bob McNally, who was an energy adviser to President George W. Bush, said the release was “not big enough to offset the potential loss of Russian oil exports should the conflict and sanctions pressure continue to extend.”

The oil market tends to go in cycles, so the release may allow the government to sell high and, later, buy low, potentially earning billions of dollars for the Treasury. The government will use the money it makes from oil sales to refill the reserve, which in turn could help raise prices again.

While pushing up those prices, Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy and a former aide to President Barack Obama, said an eventual refill could also “send a signal to shale producers that may help encourage them to invest in more production, which may help with today’s potential shortages.”

The U.S. reserve contains nearly 600 million barrels, approximately a month of total American consumption, and it can release up to 4.4 million barrels a day. The stockpile was established after the 1973 energy crisis, when Saudi Arabia and other Arab producers proclaimed an oil embargo.

Megan Specia contributed reporting from Krakow, Poland, and Steven Erlanger from Brussels.

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Commodities

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  • Most of combined release would come from U.S. stocks – Citigroup
  • Japan restricted in how it can use its releases
  • OPEC+ has been slowly adding supply back to the market
  • U.S. leading effort to release barrels to cool prices

TOKYO/NEW DELHI, Nov 22 (Reuters) – Japanese and Indian officials are working on ways to release national reserves of crude oil in tandem with the United States and other major economies, but the timing of such a release remains unclear, seven government sources with knowledge of the plans told Reuters.

Such an announcement could come as early as Tuesday, according to a source familiar with the discussions, but White House and U.S. energy department officials said no official decision on a release had been made. read more

U.S. President Joe Biden has asked China, India, South Korea and Japan for a coordinated oil stocks release as U.S. gasoline prices soar and his approval ratings slump ahead of next year’s congressional elections.

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The U.S. government has been unable to persuade OPEC+ to pump more oil, with major producers arguing the world was not short of crude.

OPEC and other producers including Russia, known collectively as OPEC+, have been adding around 400,000 barrels per day to the market on a monthly basis, but have resisted Biden’s calls for more rapid increases, arguing the rebound in demand could be fragile.

The threat of a coordinated release, along with new coronavirus-related lockdowns in Europe, has knocked the wind out of crude oil’s rally. Brent crude was last trading at $79.30 a barrel, down more than $7 from a peak reached in late October.

Citigroup analysts estimated in a note that the United States could release anywhere from 45 million to 60 million barrels from its reserves that would bring forward about 20 million in already approved sales. The bank said a combined release could be at “on the order of 100-120 million bbls or higher.”

One source familiar with the discussions, however, said the input from China and other countries is still very much up in the air, and that nations like India and South Korea would be likely to contribute a small amount of barrels.

Such a move could compel OPEC+ to also reassess whether it would continue its current course of steady increases, said Joseph McMonigle, Secretary General of the Riyadh-based International Energy Forum (IEF).

“If they are going to make a change, it will be because of unforeseen external factors, such as these lockdowns in Europe, any kind of strategic release, and shifts in jet fuel demand,” said McMonigle. The IEF is the largest international organization of energy ministers and includes Saudi Arabia, the United States and Russia.

The increase in COVID cases in Europe supports recent comments from the likes of OPEC Secretary General Mohammed Barkindo, who said the market will soon be facing a surplus. In that case, OPEC members with more room to boost output may instead prefer to maintain current production or even reduce it.

“An SPR release could easily backfire,” said Troy Vincent, market analyst at DTN.

Japanese Prime Minister Fumio Kishida signalled his readiness to release stocks over the weekend. read more

Three Indian government sources said on Monday they were holding consultations with the United States on the release of oil from strategic reserves.

Japan, the world’s fourth-biggest oil buyer, is restricted on how it can act with its reserves – made up of both private and public stocks – which typically can only be used in times of shortage.

One Japanese source said the government was looking into releasing from the portion of state-held stocks outside the minimum amount required as a legal workaround.

Japan’s oil reserve held 145 days’ worth of daily petroleum consumption at the end of September, according to official data, well above the minimum 90 days required by law.

Japanese private companies including refiners hold about 175 million barrels of crude and oil products as part of the Strategic Petroleum Reserve (SPR), enough for around 90 days’ consumption, according to state agency Jogmec.

India holds about 26.5 million barrels of oil in its SPR.

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Reporting by Yoshifumi Takemoto, Ritsuko Shimizu and Aaron Sheldrick and Nidhi Verma; Additional reporting by Jeff Mason and Tim Gardner in Washington and Jessica Resnick Ault in New York; Writing and additional reporting by Kantaro Komiya; Editing by Louise Heavens, Kirsten Donovan, Mark Potter and Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.

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High Gas Prices Force Sacrifices, Like Travel and Dining Out

A driver in Belleville, N.J., cut his cable and downsized his apartment to save money for gas. A retiree in Vallejo, Calif., said he had stopped driving to go fishing because the miles cost too much in fuel. An auto repairman in Toms River, N.J., doesn’t go to restaurants as often. And an Uber Eats deliveryman said he couldn’t afford frequent visits to his family and friends, some of whom live 60 miles away.

“Times are tough right now,” Chris Gonzalez, 31, the Uber Eats driver, said as he filled up his tank at a Safeway gas station off Interstate 80 in California.

Millions of American drivers have acutely felt the recent surge in gas prices, which last month hit their highest level since 2014. The national average for a gallon of gas is $3.41, which is $1.29 more than it was a year ago, according to AAA. Even after a recent price dip in crude oil, gasoline remains 7 cents more per gallon than it was a month ago.

While consumers are seeing a steady rise in the prices of many goods and services, the cost of gas is especially visible. It is displayed along highways across the country, including in areas where a gallon has climbed as high as $7.59.

survey from the fuel savings platform GasBuddy.

instructed the Federal Trade Commission this week to investigate why prices at the pump haven’t declined as much as might be expected, citing the possibility of “illegal conduct” by oil and gas companies. The administration is also facing calls from Congress to tap the country’s Strategic Petroleum Reserve, which the Senate majority leader, Chuck Schumer, said would help struggling Americans.

Gas prices have gone up in part because of fluctuations in supply and demand. Demand for oil fell precipitously in the early months of the pandemic, so the Organization of the Petroleum Exporting Countries and other oil-producing nations cut production. In the United States, reduced demand led to a substantial decline in drilling; the country’s oil rig count was down nearly 70 percent in summer 2020.

But over the past year, demand for oil recovered far faster than OPEC restored its production, and crude oil prices doubled to as much as $84 a barrel. (Since Nov. 9, the price has declined to just over $76.)

higher in the past; in 2008, the national average rose above $4.10 per gallon. (Adjusted for inflation, that would be equivalent to $5.16 today.) They’re optimistic that the increase in travel and gas demand is a reflection of the economy’s rebound from the pandemic, though they worry that rising prices could make people cut back on other spending.

“If gas prices rise so much that it affects consumers’ disposable incomes, this would weigh on discretionary spending,” said Fawad Razaqzada, a market analyst at ThinkMarkets. “It would be bad news for retailers.”

In California, where the average price of a gallon is the highest in the nation, at more than $4.60, drivers said they were changing their behavior. Some sought out cheaper spots, like Costco and Safeway gas stations, to save a few dollars.

At an Arco station in San Francisco’s NoPa neighborhood, a line of cars extended into the crowded street on Thursday. Some drivers searched for change. Others grumbled about the prices, which have shot up to as much as $4.49 at the Arco — known locally for its normally cheap rates — and up to $5.85 in the most expensive part of the city.

Keith Crawford, 57, who was filling up his Kia Optima, said he had taken to getting smaller amounts of gas twice a week to soften the blow to his bank account.

“You have to spread it out in order to stay afloat,” said Mr. Crawford, a concierge. “It’s part of the budget now.”

Thirty miles northeast of San Francisco in Vallejo, drivers lined up at the Safeway gas station off I-80, where the price was $4.83 per gallon. Several put the blame for their bills on the Biden administration.

“It’s Biden, Gavin Newsom — look at the gas taxes we pay,” said Kevin Altman, a 54-year-old retiree, referring to California’s governor.

Mr. Altman paid $50 to fill up his Jeep and estimated the gas would last him just two days. He said he had stopped driving to go fishing in nearby Benicia to avoid using too much gas, and would do all his Christmas shopping online this year.

The cost can be especially challenging for people who own businesses that depend on transit. Mahmut Sonmez, 33, who runs a car service, spends nearly $800 on gas out of the $2,500 he earns each week driving people around New Jersey. To save money, he moved in September into a Belleville apartment that is $400 cheaper than his previous home. He also cut his cable service and changed cellphone plans.

If gas prices keep rising, Mr. Sonmez said, he will consider changing jobs after nine years in the industry. “Somehow we’ve got to pay the rent,” he said.

In New Jersey, which bans self-service gas, some drivers are directing their ire toward station attendants.

“Every day they’re cursing me out,” said Gaby Marmol, 25, the assistant manager of a BP station in Newark, adding that when she sees how much the customers spend on both gas and convenience store items — $1.19 for ring pops that used to be 50 cents — she feels sympathetic. “We’re just doing our jobs, but they think we set the prices.”

Cheik Diakite, 62, an attendant at a Mobil station in Newark, doesn’t get as many tips as he did before the pandemic, he said, and grows frustrated listening to customers attribute the high prices to Mr. Biden.

Mr. Diakite typically passes afternoons by looking out for his most loyal customers. Bebi Amzad, who works at a nearby school, always has the same request for him: “Fill it up.” But when she pulled in on Thursday, she asked him to give her just $30 worth of gas.

“Today I’m not filling up all the way because I have other expenses,” said Ms. Amzad, 54, who commutes to Newark from Linden, N.J. “Everybody is hurting.”

Because she spends so much on gas and groceries, Ms. Amzad continued, she can’t afford many indulgences. “I don’t go to Marshalls anymore.”

Clifford Krauss contributed reporting.

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