As oil prices rise well above $ 100 a barrel – and some industry analysts predict it could reach $ 130 – the energy agency said it intended to “send a unified and strong message to global oil markets that there will be no shortage of supplies as a result of Russia’s invasion of Ukraine.
The release is only the fourth time the international organization has seen a coordinated withdrawal of reservations since its inception in 1974. The IEA said in a statement that its initial release was equivalent to 2 million barrels per day for 30 days.
“I am just happy that the IEA also came together today to take action. The situation in the energy markets is very serious and requires our full attention, “said IEA Executive Director Fatih Birol. “Global energy security is under threat, putting the global economy at risk during a fragile phase of recovery.
The US Department of Energy plans to release 30 million barrels of oil from the strategic oil reserve, one of the most aggressive steps the White House has taken as it seeks to cut costs for consumers. In separate statements released Tuesday, Energy Secretary Jennifer Granholm and White House spokeswoman Jen Psaki suggested the Biden administration could release more.
The United States is “prepared to use every tool we have to limit the disruption of global energy supplies as a result of President Putin’s actions,” Psaki said. We will also continue our efforts to accelerate the diversification of energy supplies away from Russia and to protect the world from the armament of oil and gas from Moscow.
The release represents a small percentage of the country’s total reserves, which held 582.4 million barrels as of February 22nd. This is the second time the Biden administration has used the reserves in coordination with other countries. The energy ministry released 50 million barrels of oil from reserves last November in a bid to cut world prices.
Analysts in the oil industry said it was unclear exactly what effect the release of oil reserves would have on prices. Uncertainty about how long the war in Ukraine will last and what effect it will have on Russian oil exports makes it difficult for experts to predict how much worse the oil shortage could become in the coming weeks and months.
Russia is the world’s third-largest oil producer. It exports more oil than any other country – about 5 million barrels of crude oil a day – and accounts for approximately 12 percent of world trade.
Replacing Russia’s oil exports in the long run with emergency reserves is not an option, industry analysts said. But as a short-term response to inflationary pressures and rising gasoline prices, it is expected to compensate for supply shortages and either lower prices or prevent them from rising.
Drivers and Americans who depend on oil to heat their homes are unlikely to feel the impact of the parties’ decision for several weeks. It takes time for refineries to convert crude oil into petrol, diesel and other petroleum products, and more time for these fuels to reach consumers. Meanwhile, experts say the average price of gasoline in the United States is likely to continue to rise.