The 31 member states of the International Energy Agency (IEA) have agreed to jointly release some 60 million barrels of their strategic oil reserves in order to strongly indicate to the oil markets that there will be no supply shortages following Russia’s invasion of Ukraine.
Jennifer Granholm, the US Energy Secretary, chaired a meeting where the decision was made together with other energy ministers. In a statement, she said the US President had authorised the release of 30 million barrels, half of the total, with the country being prepared to take further measures if necessary.
Russia is the third-largest oil producer in the world, and while Russian oil and gas exports have so far been excluded from European and US sanctions, the shock to the markets has driven crude oil prices above $100 per barrel. The price of derived products, such as vehicle fuel and spindle oil from companies like Shell, is usually dependent on the price of oil, so increasing oil prices add to inflationary pressure.
Fatih Birol, the Executive Director of the IEA, said about this in a statement that:
“The situation in energy markets is very serious and demands our full attention. Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery.”
The IEA’s members together hold about 1.5 billion barrels of oil in their emergency stockpiles, which were set up following the 1974 Arab oil embargo. The new coordinated drawdown is only the fourth to happen since then.