The United States and other major oil-producing nations said on Tuesday they would release 60 million barrels of oil from their emergency stocks, boosting new crude oil supplies to the market amid rising prices caused by Ukraine’s crisis.
The move by members of the Paris-based International Energy Agency, which includes the United States, Japan and much of Europe, is another coordinated effort to counter Russia amid its invasion of Ukraine. The coordinated withdrawal is the fourth in the IEA’s 47-year history and is the second largest only since the liberation it waged during the first Gulf War in 1991.
The IEA said it wanted to “send a united and strong message to global oil markets that there will be no supply shortages as a result of Russia’s invasion of Ukraine.”
The IAEA has said it supports sanctions imposed by Russia’s international community, but is also concerned about tight global oil markets, increased price volatility and trade stocks, which are at their lowest level since 2014.
The United States and other IAEA countries hope to lower oil prices, which traded above $ 100 a barrel on Tuesday at eight-year highs. Prices rose after the IEA announced to almost $ 106 per barrel, or 8.1% during the day.
Lower oil prices will reduce revenues for Russia, one of the world’s largest oil producers, and potentially give the United States and Europe more room to focus on Moscow’s energy industry, which has so far been unacceptable because of the pain. which energy sanctions would cause in the West.
The IEA’s oil spill is less than the initial estimate of 70 million barrels and will include 30 million barrels from the United States, people informed the discussions said.
This will be the second release of oil reserves in three months. The Biden administration has already decided to release 50 million barrels of oil from US reserves in November, while China and others have also used their own reserves. The IEA, which did not join the United States in the latest edition because some European countries thought it was unjustified, will now monitor the effort.
Russia’s attack on Ukraine has helped raise oil prices to more than $ 100 a barrel for the first time since 2014. This is how rising oil prices could further boost inflation in the US economy. Photo illustration: Todd Johnson
The IAEA has said the quantities to be released amount to 4% of its members’ stocks, equivalent to 2 million barrels a day for 30 days.
The decision to release the stock comes when the Saudi-led Organization of the Petroleum Exporting Countries and its Russian-led allies decide to maintain a small increase in production of 400,000 barrels a day at a virtual meeting on Wednesday. The alliance, often referred to as OPEC +, has approved monthly increases in oil production, but they have not reduced prices.
After the release was announced, OPEC delegates said it would not affect their decision to gradually increase production on Wednesday. Saudi Arabia is of the opinion that the oil market is well stocked and that the rise in prices is due to speculation separated from market bases.
In a note Tuesday, Louise Dixon, a senior analyst at Rystad Energy’s oil market, said OPEC + producers were producing about 800,000 barrels a day below promised targets, “supplementing supply market shortages and further fueling the rising price environment.” . “
The aftermath of the invasion of Ukraine has raised questions about Russia’s reliability as a supplier of oil and gas to consumers around the world. Russia is the largest exporter of gas and a major supplier of raw, refined products and other resources, including to the United States. Revenues from overseas energy sales are vital to financing the Russian state, including its military machine.
International sanctions have so far saved energy exports. There is also evidence that the conflict is beginning to damage oil supplies to Russia. Some banks refuse to finance trade in Russian crude oil due to fears of sanctions; a number of tankers are blocked or cannot be loaded in the Black Sea, a key oil waterway; and countries such as the United Kingdom, Canada and Malaysia are now banning Russian oil ships.
Restrictions on the Russian economy have also escalated faster than many in the energy industry expected, hitting, among other targets, the still unused Nord Stream 2 gas pipeline connecting Russia with Germany.
Write to Benoit Faucon at [email protected] and Summer Said at [email protected]
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