The US and other major economies have agreed on a coordinated release of oil stockpiles, according to people familiar with the matter, after Russia’s invasion of Ukraine pushed crude above $100 a barrel.
Stating that the International Energy Agency (IEA), which represents important industrialized consumers, has agreed to distribute 60 million barrels of stocks around the world, the person asked not to be named because the information was not publicly available.
Half of that amount will come from the US Strategic Petroleum Reserve, with the rest coming from IEA members in Europe and Asia, he said. As rising fuel costs become a growing political problem for President Joe Biden, some of the American crude oil reserves will be released for a second time in a few months.
The US Department of Energy declined to comment. The IEA could not be immediately reached for comment.
Crude oil prices are above $105 a barrel in London for the first time since 2014 amid fears that oil and gas supplies from energy giant Russia could be disrupted by conflicts in Ukraine or retaliatory western sanctions. The rise is exacerbating inflationary volatility for energy-consuming countries, threatening economic recovery, and exacerbating the cost of living crisis for millions of people.
Russia’s aggression spooked the already tight oil market, with the strong recovery in demand as the epidemic subsided and constraints on supply due to poor sales and disruptions around the world. Trading giants Vitol Group and Trafigura Ltd. expects triple-digit prices to continue for a long time.
The IEA’s intervention came after the OPEC+ coalitions led by Saudi Arabia and Russia failed to take into account Biden’s incentive to increase supply more quickly last year. The group meets once again on Wednesday to discuss production plans for April.
Riyadh has signaled that it does not expect a tight market to accelerate the restoration of production that OPEC and its partners halted during the pandemic. Many other countries in the 23-member alliance were unable to increase supply any faster, even if they wanted to, due to lack of investment and instability.
The IEA will release oil stocks in sync for the first time since the Libyan civil war in 2011. This crisis has repercussions in events today: Riyadh’s reluctance to turn on the taps to offset the disruption caused by the uprising against dictator Gaddafi ten years ago prompted the agency today.
Previous deployments took place during the 1991 Gulf War and 2005 during the hurricanes Rita and Katrina, making this the fourth response in the IEA’s 50-year history.
The IEA’s 30 members from the Organization for Economic Co-operation and Development include the USA, Japan, Germany and France.
The informant said that OPEC has been briefed on the planned IEA stock release.