The 31 Member Countries of the Governing Board of the International Energy Agency (IEA) has agreed to release 60 million barrels of oil from their emergency reserves, according to a release by the agency. This was done to send a unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia’s invasion of Ukraine.
The statement which was made in a Governing Board meeting, held at the Ministerial level, was chaired by Jennifer Granholm, US Secretary of Energy, in her capacity as Chair of this year’s IEA Ministerial Meeting. According to the release, the Agency 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. “It is heartening to see how quickly the global community has united to condemn Russia’s actions and respond decisively. 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. I am pleased that the IEA has also come together today to take action,” Fatih Birol, IEA Executive Director, said.
Birol also extended his gratitude to the IEA member countries that made available the initial 60 million barrels to provide stability to oil markets. “I am also happy that our member countries committed to do their utmost to support Ukraine in terms of fuel supply. At the invitation of the Governing Board, I am also looking forward to welcoming Ukraine Energy Minister German Galushchenko as a special guest to our forthcoming Ministerial Meeting later this month.”
Meanwhile, the Agency’s members whose emergency stockpiles is over 1.5 billion barrels announced an initial release of 60 million barrels, or 4 percent of those stockpiles.This will be an equivalent to 2 million barrels of oil a day for 30 days.
Besides, this coordinated drawdown will be the fourth in the history of the IEA, which was created in 1974. Previous collective actions were taken in 2011, 2005 and 1991. Meanwhile, Russia, who is currently invading Ukraine, plays an outsized role on global energy markets as it 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 percent of global trade – and its approximately 2.85 million barrels a day of petroleum products represent around 15 percent of global refined product trade. Around 60 percent of Russia’s oil exports go to Europe and another 20 percent to China,” the report read.
However, 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 Secretariat will continue to closely monitor global oil and gas markets and to provide recommendations to the Governing Board, including possible additional emergency oil stock draws, as needed.”
The Governing Board also encouraged each member country to do its utmost to support Ukraine in the supply of oil products, recommending that governments and consumers maintain and intensify conservation efforts. Also, 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 was discussed.
In addition, the IEA Secretariat said it will release a 10-Point Plan for how European countries can reduce their reliance on Russian gas supplies by next winter.