IEA to deploy emergency oil stocks | Rigzone
The United States and other major economies have agreed to a coordinated release of oil inventories after Russia’s invasion of Ukraine pushed crude above $100 a barrel, people say close to the file.
The International Energy Agency, which represents major industrialized consumers, has agreed to deploy 60 million barrels from stockpiles around the world, the sources said, asking not to be named because the information is not public.
Half of that amount will come from the U.S. Strategic Petroleum Reserve, with the rest coming from IEA members in Europe and Asia, one of the people said. It will be the second release of US crude reserves in months, with soaring fuel prices becoming a growing political issue for President Joe Biden.
The US Department of Energy declined to comment. The IEA could not immediately be reached for comment.
Crude prices rose above $105 a barrel in London for the first time since 2014 on fears that the Russian energy giant’s oil and gas supply could be disrupted, either by the conflict in Ukraine or by Western sanctions in retaliation. The rally is exacerbating an inflationary push for energy-consuming countries, threatening economic recovery and deepening a cost-of-living crisis for millions.
Russia’s aggression spooked an already tight market with a strong recovery in demand as the pandemic subsides, and supply constraints due to underinvestment and global disruptions. Commercial giants Vitol Group and Trafigura Ltd. expect triple-digit prices to hold for an extended period.
The IEA’s intervention comes after the OPEC+ coalition, led by Saudi Arabia and Russia, ignored Biden’s encouragement last year to ramp up supplies more quickly. The group meets again on Wednesday to discuss its production plans for April.
Riyadh has signaled that it does not see markets as tight enough to speed up the restoration of production that the Organization of the Petroleum Exporting Countries and its partners halted during the pandemic. Many other countries in the 23-member alliance could not increase their supplies any faster, even if they wanted to, due to lack of investment and instability.
OPEC has been notified of the planned release of IEA stocks, one of the people said.
Soaring gasoline prices are a particular risk for Biden, who faces a midterm election with declining approval ratings. It has already failed to rein in fuel costs with the release of crude from emergency stocks announced last year. Traders said the initiative was undermined by its limited scope, with most barrels offered on condition of later return.
This is the first time the IEA has made a synchronized release of oil stocks since the Libyan civil war in 2011. There are echoes of this crisis in today’s events: it was Riyadh’s reluctance to turn on the taps a decade ago to offset the disruption caused by the uprising against dictator Muammar Gaddafi that prompted the agency to act.
Previous deployments were during the 1991 Gulf War and the onslaught of Hurricanes Rita and Katrina in 2005, making this the fourth such intervention in the IEA’s five-decade history.
The IEA’s 30 members, drawn from the Organization for Economic Co-operation and Development, include the United States, Japan, Germany and France.
–With help from Ari Natter.