The 31 member countries of the International Energy Agency (IEA) have agreed to release 60 million bbl of oil to prevent a shortage as a result of sanctions against Russia.
It is only the fourth time since the creation of the IEA in 1974 that its members have agreed such a coordinated drawdown. The 60 million bbl being released by the 31 IEA member countries amounts to around 4% of their collective stockpiles of 1.5 billion bbl. It is the equivalent of 2 million bpd for 30 days. The US will account for half of the release, with president Joe Biden confirming that 30 million bbl will be released from the US strategic petroleum reserve. White House press secretary Jen Psaki said that it would counteract the weaponisation of oil and gas by Russian president Vladimir Putin.
Russia is the world’s third largest oil producer. It exports around 5 million bpd of crude oil, around 12% of global crude trade, and 2.85 million bpd of refined products, about 15% of global refined products trade. 60% of its exports go to Europe and 20% to China. However, increasing global anger about Russia’s attack on Ukraine and sanctions against it means that there are growing fears about oil supply, and as a result, oil prices are soaring to more than US$110 per barrel.
Ministers at the Extraordinary Governing Board meeting noted the concerns surrounding energy security, with the Russian invasion of Ukraine coinciding with already tight global oil markets, heightened price volatility, low commercial inventories and the limited ability of producers to provide additional supply in the short-term. Ministers at the meeting supported the international sanctions on Russia and ‘expressed solidarity’ for the people of Ukraine and their government.
‘It is heartening to see how quickly the global community has united to condemn Russia’s actions and respond decisively. I am pleased that the IEA has also come together today to take action. The situation in energy markets is very serious and demands our full attention. Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery,’ says IEA executive director Fatih Birol, adding: ‘I am grateful that IEA member countries made available the initial 60 million bbl to provide stability to oil markets. I am also happy that our member countries committed to do their utmost to support Ukraine in terms of fuel supply. At the invitation of the Governing Board, I am also looking forward to welcoming Ukraine Energy Minister German Galushchenko as a special guest to our forthcoming Ministerial Meeting later this month.’
The IEA secretariat will continue to monitor global oil and gas markets and will advise the governing board as necessary.
(Source: Tank Storage Magazine)