US, IEA agree to release 60 million barrels from oil reserves amid turmoil in Ukraine

The United States and other major oil-consuming nations on Tuesday said they would release 60 million barrels of oil from their emergency reserves, sending a large amount of new crude supply to the market amid rising prices due to Ukraine crisis.

The move by members of the International Energy Agency, a Paris-based group that includes the US, Japan and much of Europe, represents another concerted effort to counter Russia in the wake of the pandemic. its invasion of Ukraine. The coordinated drawdown is the fourth in the IEA’s 47-year history.

The IEA said it wanted to send “a unified and strong message to the global oil markets that there will be no supply shortages as a result of Russia’s invasion of Ukraine”.

The IEA says it supports sanctions of the international community Russia but also worries about a tightening global oil market, heightened price volatility and trade inventories at their lowest levels since 2014.

US and other IEA countries are hoping for a drop in oil prices, trading on Tuesday over $100 a barrel at an eight-year high. Prices rose following the IEA announcement to nearly $106 per barrel, or 8.1 percent on the day.

Falling oil prices will reduce revenue for Russia, one of the world’s biggest oil producers, and potentially give the US and Europe more opportunities to target Moscow’s energy sector. so far exceeded the limit because the energy sanctions will cause pain in the West.

The IEA’s oil release is smaller than its initial consideration of 70 million barrels and will include 30 million barrels from the US, people briefed on the discussions said.

This will be the second release of oil reserves in three months. The Biden administration has decided release 50 million barrels oil from the US stockpile in November, while China and other countries also exploited their own inventories. The IEA, which did not engage with the United States in its previous release because some European countries felt it was unreasonable, will now oversee the effort.

Russia’s attack on Ukraine helped push oil prices above $100 a barrel for the first time since 2014. Here’s how rising oil prices could further fuel inflation across the US economy. Illustration: Todd Johnson

The IEA said the amount would be freed up to 4% of members’ stockpiles, or 2 million bpd, over 30 days.

The decision to release the stockpile came as the Organization of the Petroleum Exporting Countries led by Saudi Arabia and its allies led by Russia decided to maintain a small increase in production 400,000 bpd at Wednesday’s virtual meeting. The alliance, commonly known as OPEC+, approved a monthly increase in oil production, but they did not lower prices.

After the announcement was published, OPEC delegates said it would not affect their decision to gradually increase output on Wednesday. The view from Saudi Arabia is that the oil market is indeed well supplied and the price increase is due to speculation that is not connected to the market fundamentals.

In a note on Tuesday, Louise Dickson, senior oil market analyst at Rystad Energy, said the OPEC+ members participating in the deal are producing about 800,000 bpd below their promised target. them, “adds to the scarcity in supply markets and further fuels a bullish price environment. ”

The aftermath of the Ukraine invasion has raised questions about Russia’s reliability as a supplier to oil and gas consumers around the world. Russia is the largest gas exporter and a major supplier of crude products, refined products and other resources, including to the United States Revenue from overseas energy sales is critical to finance the Russian state, including its war machine.

International sanctions have so far had no effect on energy exports. There is also evidence that the conflict is starting to hurt Russian oil shipments. Some banks are refusing to finance Russian crude oil deals due to sanctions concerns; some oil tankers are stuck or unable to load in the Black Sea, an important oil route; and countries such as the UK, Canada and Malaysia are currently banning Russian oil tankers.

Restrictions on the Russian economy also escalated much faster than many in the energy industry anticipated, which, among other goals, remains unused. Nord Stream 2 . gas pipeline connecting Russia with Germany.

Write letter for Benoit Faucon at benoit.faucon@wsj.com and Summer Said at summer.said@wsj.com

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https://www.wsj.com/articles/u-s-iea-agree-to-release-60-million-barrels-from-oil-stockpiles-amid-ukraine-turmoil-11646151424 US, IEA agree to release 60 million barrels from oil reserves amid turmoil in Ukraine

Ethan Gach

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