The White House is "dusting off old plans" for a potential release of oil reserves to dampen rising U.S. gasoline prices and prevent high energy costs from undermining the success of Iran sanctions, a source with knowledge of the situation said on Thursday.
U.S. officials will monitor market conditions over the coming weeks, watching whether gasoline prices fall after the Sept. 3 Labour Day holiday, as they historically do, the source said.
It was too early to say how big a drawdown would be from the U.S. Strategic Petroleum Reserve and, potentially, other international reserves if a decision to proceed was taken, the source said.
Oil prices have surged in recent weeks, with Brent crude prices closing in on $120 (U.S.) a barrel, up sharply from around $90 a barrel in July. The United States and other Group of Eight countries studied a potential oil release in the spring but shelved the plans when prices dropped.
With prices high again, U.S. officials were now collecting information from the market about potential needs and studying futures, production numbers and data on Iranian oil exports.
"The driving force in this is both impact on the economy and impact on the Iran sanctions policy," the source said, noting that Washington did not want rising oil prices to create a windfall for Iran while oil embargo and international sanctions were having an effective impact.
The United States has yet not held talks with international partners about a co-ordinated move. The source noted that Britain, France, Germany and other partner nations in the Paris-based International Energy Agency were receptive to a potential release a few months ago when conditions were similar.
Those countries were concerned about the impact of high oil prices on the global economy and Iran then, and those concerns "remain equally relevant today."
Domestically, tapping reserves could spark criticism from Republicans, who would cast it as a political move to boost Democratic President Barack Obama's chances in the Nov. 6 election.