Oil dives by over US$5 as Biden seen to cut fuel costs

LONDON • Oil prices plunged more than US$5 a barrel yesterday amid a push by US President Joe Biden to bring down soaring fuel costs, including putting pressure on the country's major energy companies to help ease the pain for drivers during peak summer consumption.

Brent crude futures slumped US$5.10, or 4.5 per cent, to US$109.55 a barrel while US West Texas Intermediate futures were down US$5.37, or 5.9 per cent, at US$104.15 as at 3pm Singapore time. The contracts earlier hit their lowest levels since May 19 and 12, respectively.

Mr Biden was expected yesterday to call for temporarily suspending the 18.4 US cents per gallon federal tax on petrol, a source said, as the United States, the world's largest oil consumer, struggles to tackle soaring petrol prices and inflation.

"The latest in a long line of attempts to temper surging prices at the pumps is having the desired effect. Yet whether this knee-jerk reaction will stand the test of time is by no means guaranteed," said oil broker PVM Oil Associates' Stephen Brennock, pointing to an expected summer demand surge.

Mr Biden is expected to make the announcement early this morning. Tomorrow, seven oil companies are set to meet him. They are under pressure from the White House to drive down fuel prices as they make record profits.

Chevron chief executive Michael Wirth has said criticising the oil industry was not the way to bring down fuel prices and that the government had to change its approach. Mr Biden has replied, commenting on the industry's easily hurt feelings.

Global supply is still expected to lag behind demand growth as flagged by trading giant Vitol and Exxon Mobil this week.

The US$2.4 trillion set to be invested in energy this year includes record spending on renewables but falls short of plugging a supply gap and tackling climate change, the International Energy Agency said yesterday.

Meanwhile, US oil refining capacity fell last year the second year in a row, government data showed on Tuesday.


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A version of this article appeared in the print edition of The Straits Times on June 23, 2022, with the headline Oil dives by over US$5 as Biden seen to cut fuel costs. Subscribe