President Donald Trump is reportedly considering tapping the nation's stockpile of emergency oil supplies as prices at the pump remain stubbornly elevated.
The administration is actively considering selling 5 million to 30 million barrels from the Strategic Petroleum Reserve into the market, two sources with knowledge of the situation told Bloomberg News. The administration is also mulling a larger release that would be coordinated with other nations, the sources said.
Crude futures pared gains by about $1 a barrel following the report.
The Wall Street Journal later reported that some members of the Trump administration oppose the plan.
However, Fatih Birol, director of the International Energy Agency, recently told attendees at a private dinner that his organization was considering a strategic release, the Journal reported, citing people who attended the event. The IEA advises developed nations on energy policy.
Trump has lately expressed frustration at oil and gas prices, blaming OPEC on Twitter and demanding that the 15-member producer group hike output to stop crude costs from bubbling up.
The national average price for a gallon of regular gasoline is currently $2.88, up about 60 cents from a year ago, according to AAA. Oil prices, which account for about half the cost of the gasoline price, have recently hit 3½-year highs above $80 a barrel.
OPEC has propped up prices since January 2017 by limiting its supply, but the slow-and-steady rally accelerated earlier this year when Trump restored sanctions on Iran, the world's fifth largest oil producer. Prices have also risen on production declines in major producing nations like Venezuela and Angola and supply disruptions in Libya and Canada.
The State Department sent oil prices soaring two weeks ago when a senior official revealed the administration is pushing oil buyers to cut their imports from Iran to zero by November. The announcement came just days after OPEC, Russia and several other producers agreed to start pumping more.
However, many analysts are skeptical top OPEC producer Saudi Arabia can offset potential the looming drop in Iran's exports and disruptions elsewhere. Trump's aggressive bid to remove Iranian barrels from the market could boost gasoline prices into the fall, depriving Americans of the fuel price relief they usually get, just as they head to the polls, analysts recently told CNBC.
Rumors and speculation that Trump could release oil from the Strategic Petroleum Reserve have been creeping into the market in recent weeks.
Gary Ross, head of global oil analytics at S&P Global Platts, told CNBC's "Squawk Box" earlier this week that people are worried Trump could draw down the Strategic Petroleum Reserve because he is worried about gasoline prices heading into the midterm elections.
"If Trump continues to believe that OPEC are not doing enough, we would not rule out an SPR release from the US, or possibly even export restrictions on petroleum products," ING said in a research note following Trump's latest Twitter broadside last week.
The United States currently holds 660 million barrels of oil in reserve. The reserve was established after the 1970s oil crisis to ensure the U.S. economy would not suffer shocks in times of tight supply. It has only been used three times to counter import cutoffs or for foreign policy purposes.
The Trump administration previously proposed selling off half of the reserve to help reduce the national deficit.