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The 31 member countries of the International Energy Agency (IEA) have agreed to release 60 million barrels of oil in addition to the 180 million the U.S. plans to release from its strategic reserve over the next six months, IEA director Fatih Birol announced.
“More details of specific contributions [by individual countries] will be made public soon,” he said.
IEA members agreed on the coordinated release on 8 April from their collective reserve of 1.5 billion barrels to ease oil prices that have spiked since Russia invaded Ukraine, OPEC refused to raise production, and U.S. producers have so far declined to boost their output (see “U.S. Oil Industry Will Not Raise Output, Executives Say” 29 Mar 2022).
Russia is one of the world’s three leading oil exporters and has provided about 12 percent of the global supply.
The IEA’s new release will be the group’s second within a month and its fifth ever.
Commercial oil stocks are at their lowest levels since 2014, the IEA said, and producers have little ability to pump more in the short term.
As a result of this collection of factors, the global oil market could be losing as much as two billion barrels a day of production, the IEA said.
“While it’s welcome that we’re seeing the IEA add another 60 million barrels to last week’s 180-million barrel release by the U.S., the picture for oil prices will continue to be driven by geopolitical events,” CMC strategist Michael Hewson said in a statement cited by Business Insider.
The U.S. plans to release one million barrels of crude oil every day from its Strategic Petroleum Reserve for the next six months and also released 30 million barrels on 1 March to tamp down fuel prices.
TREND FORECAST: Europe is scrambling to replace its Russian oil imports by the end of this year and trying to nail down additional sources of supply. The U.K. and U.S. are among other nations that are no longer buying Russia’s oil.
As a result, the new release will boost supply but will do little to reduce pump prices because the need to replace banned Russian oil is likely to soak up any excess supply, keeping prices aloft.