The International Energy Agency said on Friday that its 31 member nations had agreed to a new release of emergency oil reserves in what is shaping up as a historic, far-reaching effort to calm global markets roiled by Russia’s invasion of Ukraine.
A day earlier, the Biden administration announced a release of 180 million barrels over six months from the United States strategic reserve. These efforts are aimed at offsetting oil production expected from sanctions against Russia and buyers wary of Russian oil.
“This morning, over 30 countries from around the world came together in an extraordinary meeting and agreed to release tens of millions of additional barrels of oil to the market,” President Biden said at a news conference on Friday.
The Paris-based agency did not say how much oil will be released. It said more details would come next week.
The United States and the IEA have been unusually aggressive in trying to stem the devastating impact that the war in Ukraine and sanctions on Russia are having on the global economy and consumers in the United States, who are faced with rising gasoline prices. Friday’s meeting was chaired by US Secretary of Energy Jennifer M. Granholm.
The announcement is only the fifth emergency release of oil by the agency in its 48-year history and comes just about a month after a release of 63 million barrels. The agency appears to be working closely with the United States under its Executive Director, Fatih Birol, who was recently appointed for a third term. Mr. Birol has held the office since 2015.
The IEA warned of the dangers of disrupting global oil markets due to the outsized role played by Russia as the world’s third largest producer and largest exporter. The agency issued a statement saying the war in Ukraine is “taking a significant toll on global oil markets.” Storage tank farms are at an eight-year low and the agency said oil producers have a “limited ability” to expand supply in the short term.
At a meeting on Thursday, the OPEC Plus group of producers declined to put more than a modest amount of oil on the market. Two members of the group, Saudi Arabia and the United Arab Emirates, are believed to be capable of producing significant amounts of additional oil, but have so far refused to do so, citing “geopolitics” rather than oil shortages blame volatile prices.
Analysts at Goldman Sachs said in a note to clients that the oil spill from strategic reserves would “help the oil market rebalance itself in 2022” and potentially lessen the need for “demand annihilation” or reduced economic activity , to bring consumption in line with the lower deliveries.
Brent crude, the international benchmark, fell about 0.25 percent on Friday to $104.40 a barrel. West Texas Intermediate, the US standard, fell nearly 1 percent to $99.40 a barrel.
The Russia-Ukraine War and the World Economy
The analysts also said there are risks associated with the reserves’ releases, including potential logistical bottlenecks for oil trying to reach refineries and terminals in the United States. The releases could also affect potential growth in shale oil production in the United States, analysts said.
The volatile prices of recent weeks and uncertainty over the outcome of the war in Ukraine, all centered around a potential deal that could allow Iran to sell more oil, could combine to deter investment from oil producers, analysts suggested.
https://www.nytimes.com/2022/04/01/business/iea-oil-reserves.html Other nations will join the US in releasing emergency oil reserves.