In response to the market turmoil caused by Russia’s invasion of Ukraine, the International Energy Agency‘s 31-member countries have agreed to a new release of oil from emergency reserves.
The agreement was reached during an Extraordinary Meeting of the IEA Governing Board, which was chaired by U.S. Secretary of Energy Jennifer Granholm.
According to the release by the Agency, the new emergency stock release’s details will be made public next week.
Meanwhile, the agreement follows IEA Member Countries’ previous action, which saw them pledge a total of 62.7 million barrels last month.
The Agency’s members hold 1.5 billion barrels of emergency stockpiles, and this agreement marks the fifth time the IEA has released emergency stocks, with previous collective actions taking place in 1991, 2005, 2011, and on March 1, 2022.
“Russia’s egregious actions on energy security and its impact concerns us,” the Ministers reiterated. Adding that, “we (IEA Ministers) support sanctions imposed by the international community in response.”
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The Ministers further expressed their support for the Ukrainian people, while urging the member countries to assist Ukraine in obtaining oil products.
It was noted in the release that Russia’s war in Ukraine continues to put significant strains on global oil markets, resulting in heightened price volatility.
“This is taking place against a backdrop of commercial inventories that are at their lowest level since 2014 and a limited ability of oil producers to provide additional supply in the short term.
“This is also causing difficulties in the diesel markets,” the Ministers pointed out.
Meanwhile, the prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock.
Russia plays an outsized role in global energy markets. It is the world’s third-largest oil producer and the largest exporter.
Its crude oil exports of approximately five million barrels per day account for approximately 12 percent of global trade, and its petroleum product exports of approximately 2.85 million barrels per day account for approximately 15 percent of global refined product trade.
“About 60 percent of Russia’s oil exports go to Europe and another 20 percent to China,” the statement read.
However, the IEA’s decision to release new emergency oil stock came just days after the White House announced a six-month drawdown of roughly a million barrels of oil per day from its reserves, a historic drawdown that underscores the concern about rising gas prices and supply shortages following Russia’s invasion of Ukraine.
This withdrawal from the Strategic Petroleum Reserve was, however, regarded as unprecedented.
Meanwhile, in a different sphere, the IEA has unanimously voted to re-appoint Fatih Birol as its Executive Director.
Birol has been the Executive Director since September 2015, and this will be his third term.
