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President Joe Biden’s White House administration announced plans to officially cancel oil drilling leases granted to the state of Alaska in 2017 to develop and expand oil drilling projects in the Arctic National Wildlife Refuge. The leases, granted under previous president Donald Trump, opened up the wildlife preserve to fossil fuels extraction, which would have potentially provided an additional 11 billion barrels of crude oil to the American energy sector.
The move comes after the Biden administration signed an executive order on their first day in office temporarily suspending any oil drilling efforts in the Alaskan refuge. An official examination found “multiple legal deficiencies” in the analysis done by the Trump administration prior to selling the leases, which drew only three bidders. One of those bidders was the Alaska Industrial Development and Export Authority, a state-run agency. The AIDEA and its director, Randy Ruaro, are expected to challenge the official cancellations in court.
Market Reaction
With US oil markets closed, after-hours trading impacts have been limited. Future limits on US oil production will do little to ease oil prices that are already knocking on the ceiling. The WTI barrel closed on Wednesday at $87.50, its highest level since November 2022.
Source: FX STREET