By Barani Krishnan

Investing.com – Oil longs are facing their worst week since 2012 as oil prices tumbled.

The London-traded benchmark oil index settled at $104.39/barrel, down 32cs (or 0.3%) after session lows of $102.37. Brent fell 13% in the week to date, marking its largest weekly drop since April 2020. It ended the quarter with a 39% increase on Thursday.

New York-traded U.S. crude benchmark WTI settled lower at $99.27/barrel, down $1.01 or 1% after dropping to $97.81 intraday. WTI fell almost 13% over the past week, marking its largest weekly decline since April 2020. The WTI settled its first quarter trading session up 33%

To alleviate the global shortage of oil, the Biden administration declared Thursday it would release record-breaking 1.0 Million barrels of oil per day from the U.S. Strategic Petroleum Reserve in the next six month.

An array of analysts in the energy industry warn about a growing supply crisis as the United States continues to ban Russian oil. However, many countries have stopped doing business with Russia due to US sanctions against Moscow following its war on Ukraine.

Despite such warnings, the world’s biggest oil exporters in OPEC, along with their allies, which include Russia, decided on Thursday to do just a modest production increase for next month. The wider oil producers’ alliance, known as OPEC+, said it would increase output in May by 432,000 barrels a day. That’s a slight uptick from its typical monthly increment of 400,000 barrels per day in a market analysts said was in need of around 5 million barrels more.

OPEC+ also said on Thursday that the recent volatility in oil prices was “not caused by fundamentals, but by ongoing geopolitical developments,” in an apparent reference to the war in Ukraine. Brent rose to a high of $140 per barrel for 14 years in response to the Russia sanctions. They have mostly held above $100 the past month.

Amos Hochstein is the special representative of the Biden Administration for international energy affairs. He stated that Friday’s 180 million barrel release by the SPR was only the start of additional such supplies.

“I believe that we’re going to have additional capacity coming online from our allies,” Hochstein told Bloomberg TV. “There’s a meeting that is going on right now of the IEA, the International Energy Agency, to look at additional releases from the international market so we won’t just have oil coming on the market in the United States, but rather have oil coming online to the market in Asia, as well as Europe over the next several months.”

But energy market analysts appeared skeptical of the plan’s success.

“The knee-jerk selloff from the SPR announcement of the release of 1-million barrels a day from the SPR over the next six months won’t have a lasting impact on oil prices, so if geopolitical risks continue to intensify, oil will recover most of this week’s losses,” said Ed Moya, analyst at online trading platform OANDA.

Biden directed the release of 50 millions barrels from SPR in November, and 30 million in December, to coordinate with other nations’ reserves, which included South Korea, Japan, India and China.

According to U.S. Energy Information Administration (USEIA), the SPR still had 568.3million barrels left in its stocks as of March 25, 2015. With the current release plan of 180 million barrels over the next six months, the nation’s reserve could be drawn down to a third of its current size.

Biden began tapping the SPR to provide U.S. refiners with oil loaned from the reserve that they wouldn’t have to pay for but return within a stipulated period. This was done in hopes of reducing oil prices and a decrease in transactions.

Over the past weeks, 3.0 Million barrels have been released by the SPR every week. But the government’s efforts have had a negligible effect so far on prices, with refiners turning out more products than they usually do at this time of year, resulting in extraordinarily high usage that has kept prices little changed on both the crude and oil products fronts.

The Transportation Department also announced Friday that U.S. cars will be able to achieve a fuel efficiency of 49 MPG starting in 2026, compared with the 35 MPG requirement. This is because the Biden administration accelerates the reduction of fossil fuel consumption while pump prices are at an all-time high of over $4/gallon.

Biden also announced on Thursday his administration’s intent to invoke Cold War-era powers to boost domestic output of critical metals and minerals for the making of electric vehicles and the batteries to power them.