The West is using more of its emergency oil reserves to continue the effort to get rid of Russian oil.
Last Wednesday (6), the International Energy Agency (IEA) announced that it would supply the oil market with an additional 60 million barrels of its emergency stocks.
The Paris-based IEA, which monitors energy supplies to the world’s major developed economies, said details would be released.
The news was enough to bring oil prices down by more than 5%. US crude dropped to $96 a barrel, and Brent crude, the global benchmark, dropped to $101 a barrel.
The 60 million barrels will come on top of the record 180 million barrels of oil. President Joe Biden announced last Thursday (31) that the United States would release its Strategic Oil Reserve.
The United States plans to release 1 million barrels of SPR per day over the next six months. It is unclear whether the IEA’s plan will coincide with this deadline.
Still, it will take time for this additional supply to reach the market, and contributing countries will need to find buyers for their oil.
Over the next six months, the release of 240 million barrels of reserved oil would result in an average of around 1.3 million barrels per day.
The IEA said Russia could be forced to cut production by 3 million barrels a day from this month as it struggles to find buyers after the country invaded Ukraine.
If that happens, the emergency release of oil would account for about 43% of that lost production.
Russia supplies around 40% of the European Union’s natural gas imports and around 27% and 46% of oil and coal, respectively.
The US and UK have already banned oil imports from Russia, and an effectively broader embargo has been put in place as banks, traders, shippers and insurance companies try to avoid running afoul of financial sanctions.
Earlier this month, EU leaders said the bloc could not yet join the United States in banning Russian oil because of the impact it would have on households and industries already facing record prices.
Instead, they said they would work to end the bloc’s dependence on Russian energy by 2027.
redoubled efforts
The IEA announced last Friday that it would release additional oil from its emergency reserves, but did not say how much it would add to the market.
The latest measures mark only the fifth time in the agency’s history that it has coordinated the release of emergency stockpiles.
In a statement, the IEA said the energy ministers of its 31 member countries “reiterate their concerns about the energy security impacts of Russia’s egregious actions and expressed support for sanctions imposed by the international community in response.”
IEA members include the United States, the United Kingdom, Japan and Australia.
“The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock,” the IEA said in the statement, noting that Russia is currently the world’s third-largest oil producer and largest exporter.
The announcement comes on the heels of a historically large launch by the IEA.
In early March, the IEA announced the coordinated release of 60 million barrels from member countries’ emergency reserves, including 30 million from the US Strategic Petroleum Reserve.
US Presidential Coordinator for Global Energy Security Amos Hochstein told CNN International last Wednesday that the United States and Europe are working “uninterruptedly” to ensure that pressure continues to mount on Vladimir Putin, but that all costs cannot be mitigated.
“President Biden has made it very clear that when you are in a war like the one started by Putin and Russia, there will be costs. We can’t mitigate all costs, but what we’re doing is working together as an international community to mitigate as much as possible,” he told CNN’s Becky Anderson in an interview.
Hochstein highlighted the unity between the US and Europe in the response to Russia’s invasion of Ukraine. But he said both sides did not need to pass the same sanctions package, because of “different circumstances” – alluding to Europe’s heavy dependence on Russian gas.
– Mark Thompson, Matt Egan, Zeena Saifi, and Chris Liakos of CNN Business contributed to this story.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
