Member states of the International Energy Agency (IEA) agreed on Tuesday to release 60 million barrels of oil from storage, with half the volume coming from the United States, Japanese industry minister Koichi Hagiuda told reporters.
The extraordinary meeting of ministers belonging to the Paris-based agency aimed to cool oil prices that have shot above $104 a barrel in the wake of Russia’s invasion of Ukraine.
Japan has not yet decided how much oil it will release from its national reserves, the minister added. (Reporting By Yuka Obayashi Writing by Noah Browning Editing by David Goodman )
The IEA holds emergency stockpiles of 1.5 billion barrels of oil. The 60 million oil barrels released, equate to only 4 percent of the emergency stockpiles or roughly 2 million barrels per day for 30 days.
According to IEA, Russia is the world’s third-biggest crude oil producer behind the USA and Saudi Arabia.
Russia exports about 1.5 million barrels of crude oil in a day which represents roughly 12% of global trade.
Russia’s invasion of Ukraine has caused fears of an energy supply crisis which may contribute to global consumer inflation.
“Markets dismissed the notion that 60 million barrels of strategic reserves released will be consequential to the risks of Russian supply jeopardized given Russia pumps more than that in just six days,” said Vishnu Varathan, Mizuho Bank’s head of economics and strategy, in a Wednesday note. Last Thursday, crude oil prices soared, with U.S. benchmark crude surpassing $100 a barrel for the first time since 2014.
“Global energy security is under threat, putting the world economy at risk during a fragile stage of recovery,” said Faith Birol, the IEA’s executive director.
The IEA represents the interests of major energy consumers. It is made up of 31 countries which include the United States, Germany, France, the United Kingdom, Japan, and Canada. This is the fourth time that the IEA has coordinated a drawdown. The group’s previous coordinated release was in 2011 when supplies were disrupted by the Libyan civil war.
The organization of the petroleum exporting countries and its allies led by Russia are meeting to discuss April oil Output.