Western countries release emergency fuel reserves in efforts to wean off Russian oil
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Around 120 million barrels of oil held in emergency reserves have been released by member countries of the International Energy Agency (IEA) in response to soaring oil prices in the wake of the conflict in Ukraine.
The release is the largest of its kind in IEA history and followed a unanimous agreement between the countries to try to ease the significant strains in oil markets resulting from Russia’s actions.
Around half of the release comes from the US alone, which has made just over 60,000 barrels available as part of the larger release from its strategic petroleum reserve that President Joe Biden announced last week.
Japan also made a sizeable 15,000-barrel contribution, with France, Germany, Italy, Korea, the UK and Spain all releasing between 4000 and 7000 barrels each.
The commitments submitted by members reached 120 million barrels in total to be released over a six month period.
“The unprecedented decision to launch two emergency oil stock releases just a month apart, and on a scale larger than anything before in the IEA’s history, reflects the determination of member countries to protect the global economy from the social and economic impacts of an oil shock following Russia’s aggression against Ukraine,” said IEA executive director Fatih Birol.
“This latest collective action once again demonstrates the unity of IEA member countries in their solidarity with Ukraine and their determination to provide stability to the oil market during this challenging time. Events in Ukraine are becoming more distressing by the day, and action by the IEA at this time is needed to relieve some of the strains in energy markets.”
At the start of Russia’s invasion, IEA member countries held 1.5 billion barrels in public reserves and about 575 million barrels under obligations with industry. Therefore, the two IEA collective actions this year of 62.7 million barrels, which was agreed on 1 March, and 120 million barrels amount to 9 per cent of total emergency reserves.
Emergency oil stocks in IEA member countries are either in the form of public stocks (government-owned or by specialised agencies), or stocks held by industry under an obligation of the government.
In the case of public stocks, these can be released via tenders or loans to the market, which will be launched and released over the coming weeks and months, depending on the specific stockholding system and market needs in each country.
In the case of obligated industry stocks, these obligations will be lowered to make the volumes available for consumption.
Russia is the world’s third-largest oil producer, with about 60 per cent of exports going to Europe and 20 per cent going to China.
Last month, Prime Minister Boris Johnson said the UK would be making “big bets” on nuclear energy in efforts to move the country away from reliance on Russian oil imports.
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