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The International Energy Agency (IEA) has given a coordinated release of oil stocks the green light, in a bid to counter skyrocketing prices in the wake of Russia’s invasion of Ukraine.
The measure is only the fourth of its kind in the history of the IEA – with previous coordinated actions occurring in 1991, 2005, and 2011.
Members of the agency met this afternoon to discuss the measure, and a statement released on the meeting’s conclusion said that the decision was intended 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 agency also voiced support for any sanctions imposed by the international community.
As of today, the benchmark Brent crude oil price was up by just under 5%, reaching $102.55 a barrel, as Western nations turn their back on Russian oil flows and seek alternative suppliers, driving up demand in the process.
As Russia is currently the main supplier of oil and gas to Europe (providing around 40% of its gas needs), concern over the boycott’s ripple effects is high as governments struggle to meet demand.
“The rise in oil prices causes concern across the world and this has created a discussion about whether a coordinated release by IEA members of part of the existing strategic reserve would be necessary to stabilise the market,” European Commissioner for Energy Kadri Simson said on Monday.
Under the new agreement, the US and its allied states – including the UK, Germany, Japan, and Australia – will release 60 million barrels of oil from emergency stockpiles to try and rebalance the market, with about half of this figure coming solely from the US’s significant petroleum reserves.
This will be the second time in under six months that the US will release oil from its emergency stocks, having announced a release of 50 million barrels in November 2021 to similarly try and stabilise the market. This measure was conducted in tandem with oil releases from China, India, and Japan.
Oil prices reached their highest level since 2014 last week as a result of Russia’s invasion, topping $105 a barrel. Concerns over further destabilisation continue as Europe struggles with pandemic-related losses and a burgeoning energy crisis.
On Thursday, the IEA Secretariat is expected to release a 10-Point Plan on how European nations can reduce their reliance on Russian gas supplies by next winter.