Photo: Illustration; Courtesy of Equinor

U.S. and 30 IEA allies to release 60 million barrels of oil from reserves to stabilise energy markets

In response to Russia’s attack on Ukraine, the United States and 30 other countries that are members of the International Energy Agency (IEA) have committed to releasing a total of 60 million barrels of oil from strategic reserves in an effort to stabilise the global energy markets.

An emergency meeting of the IEA member countries was held on Tuesday in response to Russia’s invasion of Ukraine. The meeting was chaired by U.S. Secretary of Energy, Jennifer Granholm, in her capacity as Chair of this year’s IEA Ministerial Meeting.

As a result, the 31 Member Countries of the Governing Board of the IEA agreed to release 60 million barrels of oil from their emergency reserves to send a unified and strong message to global oil markets that there will be no shortfall in supplies, resulting from Russia’s invasion of Ukraine.

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During the meeting, Ministers expressed solidarity with the people of Ukraine and their democratically elected government “in the face of Russia’s appalling and unprovoked violation of Ukraine’s sovereignty and territorial integrity.”

U.S. Secretary of Energy, Jennifer Granholm, released a statement saying: “Today, I chaired an emergency ministerial meeting of the International Energy Agency (IEA) – founded 50 years ago by the U.S. and other allies – where the United States and 30 other member countries, supported by the European Commission, agreed to collectively release an initial 60 million barrels of oil from strategic petroleum reserves. This decision reflects our common commitment to address significant market and supply disruptions related to President Putin’s war on Ukraine.”

Granholm said that the U.S. alone had committed to releasing 30 million barrels of oil from the Strategic Petroleum Reserve.

We stand prepared to take additional measures if conditions warrant,” she said, adding: “We will continue advancing ongoing efforts to accelerate Europe’s diversification of energy supplies away from Russia and to secure the world from Putin’s attempts to weaponize energy supplies.”

Addressing the energy transition aspect of it all, Granholm noted the country’s belief that investing in clean energy is the best way to reduce domestic and international dependence on Russian oil and gas.

“Clean energy technologies are available and cost-effective today and offer the surest path towards a world where energy supply cannot be used as a means of political coercion or a threat to national security, and where families and businesses are protected from volatile prices and markets. Accordingly, we continue to support ambitious international clean energy goals and near-term action, including strong domestic climate action, and the pursuit of a net-zero emissions economy by 2050,” Granholm concluded.

The IEA Ministers noted with concern the energy security impacts of the egregious actions by Russia and voiced support for sanctions imposed by the international community in response. The ministers also noted that Russia’s invasion comes against a backdrop of already tight global oil markets, heightened price volatility, commercial inventories that are at their lowest level since 2014, and a limited ability of producers to provide additional supply in the short term.

IEA Executive Director, Fatih Birol, commented: “It is heartening to see how quickly the global community has united to condemn Russia’s actions and respond decisively. I am pleased that the IEA has also come together today to take action. 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.”

IEA members hold emergency stockpiles of 1.5 billion barrels. The announcement of an initial release of 60 million barrels, or 4 per cent of those stockpiles, is equivalent to 2 million barrels a day for 30 days. The coordinated drawdown is the fourth in the history of the IEA, which was created in 1974. Previous collective actions were taken in 2011, 2005 and 1991.

According to the IEA, Russia is the world’s third-largest oil producer and the largest exporter. Its exports of about 5 million barrels a day of crude oil represent roughly 12 per cent of global trade – and its approximately 2.85 million barrels a day of petroleum products represent around 15 per cent of global refined product trade. Around 60 per cent of Russia’s oil exports go to Europe and another 20 per cent to China.

The ministers resolved that energy supply should not be used as a means of political coercion nor as a threat to national and international security. The IEA will continue monitoring the global oil and gas markets and provide recommendations, including possible additional emergency oil stock draws, as needed.

Ministers also discussed Europe’s significant reliance on Russian natural gas and the need to reduce this by looking to other suppliers, including via LNG, and to continue to pursue a well-managed acceleration of clean energy transitions. The IEA Secretariat plans to release a 10-Point Plan on Thursday for how European countries can reduce their reliance on Russian gas supplies by next winter.

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In addition to widespread sanctions against Russian businesses by the U.S. and the European governments, energy majors like BP, Equinor, Shell, and ExxonMobil have announced their intentions to abandon their Russia-related businesses while the French major TotalEnergies said it would no longer provide investments for new Russian projects.