LONDON — Oil prices dropped sharply on Thursday after reports that U.S. President Joe Biden is considering the release of up to 180 million barrels from the country’s strategic petroleum reserve (SPR).

Biden is scheduled to make remarks Thursday night. Numerous outlets have reported that Biden’s plan to reduce the rise in crude prices will see the release of about 1 million barrels per day over several months.

International benchmark Brent crudeFutures for May dropped 3.7% to $109.21/barrel by 8:20 London time. This was paring previous losses. U.S. crudeFutures on May Delivery fell around 4.6%, to $102.89/barrel

After Russia invaded Ukraine, and the subsequent supply problems that followed, gas prices rose to new records. Inflation across the globe has risen at an alarming rate.

Russia is second in oil exports and has been subject to unprecedented international sanctions since the invasion.

Goldman Sachs commodity analysts stated in a Thursday research note that the U.S. reserve release would aid the oil market towards rebalancing by 2022 but not eliminate its structural deficit.

Goldman Sachs stated that this would decrease the price-induced destruction of oil, which is the only available oil rebalancing mechanism in an environment devoid inventory buffers or supply elasticity.

“This would however remain a release from oil inventories and not a permanent source of supply for the coming years.” This release will not solve the years-old structural shortage.

The authors also stated that higher oil prices would help support the demand for oil and slow down the growth in U.S.-shale production. This will leave a deficit in 2023, which could lead to a need to replenish U.S. reserve.

According to Angus Taylor, the Australian Energy Minister, an emergency meeting will be held by International Energy Agency on Friday in order to address concerns about oil supply.

The Organization of Petroleum Exporting Countries, along with its allies Russia (known under OPEC+), will meet later Thursday. They are expected to continue their existing agreement to increase slowly production. This is after having cut output considerably during the Covid-19 pandemic.