IEA members agree release of 60-million barrels from strategic oil stocks

Tokyo  — Members states of the International Energy Agency (IEA) agreed on Tuesday to release 60-million barrels from oil reserves, as the US and its allies seek to cool oil prices soaring from Russia’s invasion of Ukraine.

Half the volume will come from the US, Japan’s Koichi Hagiuda told reporters after the extraordinary ministerial meeting of the 31 members of the IEA, which represents mostly industrialised nations.

“We have agreed that IEA (members) as a whole will make a co-ordinated oil release of 60-million barrels in total,” Hagiuda said. 

West Texas Intermediate futures in New York surged more than 10% to trade above $105. Brent futures jumped more than 9% to above $107 a barrel. 

Prices have surged as some buyers shunned Russian barrels after Western allies imposed sanctions on Moscow, while supplies worldwide have tightened as economic demand has soared, with output struggling to keep up.

A disruption from Russia, one of the world’s top oil producers which exports about 4-million to 5-million barrels per day (bpd) of crude, could send prices even higher.

US energy secretary Jennifer Granholm chaired the meeting of the Paris-based IEA, which has co-ordinated three emergency oil stock releases in the past.

Founded in 1974 as an energy watchdog, the IEA and defines one of its main roles as helping “co-ordinate a collective response to major disruptions in the supply of oil”.

Last November, the US announced a release of 50-million barrels from the US Strategic Petroleum Reserve, a move made in concert with oil consuming nations including China, India and Japan.

The IEA did not oversee that operation, saying at the time it responds only collectively to major supply disruptions. It last co-ordinated a release amid the oil supply disruption wrought by the Libyan civil war in 2011.

China, the world’s second-largest consumer and largest importer, never officially committed to that move and has been buying more for its reserves instead.

Biden has faced strong criticism from political opponents who say his climate-friendly policies have kneecapped US energy production and driven up energy prices.

The US is responsible for about half of the world’s strategic petroleum reserves and the other 29 IEA members — including the UK, Germany, Japan and Australia — are required to hold oil in emergency reserves equivalent to 90 days of net oil imports.

Japan has one of the largest reserves after China and the US.

The IEA said in February that commercial oil stocks in Organisation for Economic Co-operation and Development countries were at the lowest level in more than seven years and covered just under 60 days of forward demand in December.

Reuters