With supplies tanking due to the Russian invasion, 31 countries will release 60 million barrels of oil that they’ve kept as strategic reserves.
The nations, which are part of the International Energy Agency (IEA) hope that the act will “send a strong message to oil markets” that there won’t be a gas shortage amid the ongoing war.
Russia is the largest exporter of oil in the world. And it is the third-largest producer. The country sends out approximately 5 million barrels of crude oil a day.
The U.S. alone imported around 245 million barrels of crude oil and petroleum products from the country in 2021. That was 24% more than we imported the previous year.
IEA made the decision to tap into the stockpile during an emergency meeting of energy ministers. U.S. Energy Secretary Jennifer Granholm headed the discussions and said that President Joe Biden approved a commitment of 30 million barrels and also added that the U.S. is ready to “take additional measures” if needed.
The organization is currently holding a total of 1.5 billion barrels of oil in emergency reserves.
“The situation in energy markets is very serious and demands our full attention,” IEA Executive Director Fatih Birol said. “Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery.”
World Governments Are Hestiant to Hit Russia With Oil Export Sanctions
Because Russia makes up about 12% of global oil trades, European countries and the U.S. have been hesitant to introduce sanctions that bar exports. Some existing sanctions do affect the ability to make payments to the country. But exceptions are written in to allow transactions that cover oil.
But the war is still affecting gas prices around the world. On Tuesday, costs passed $106 per barrel, which is the highest price since 2014.
The worldwide demand for oil was 100.2 million barrels a day during the fourth quarter of 2021, the IEA announced in February. But the group expects that number will jump to 100.6 million now that most countries have eased COVID restrictions.
The IEA began building its emergency reserves in 1974 during the Arab oil embargo. And this is only the fourth time that the group has made a coordinated release from its stockpiles.
If the release works as planned, it will, at the very least, cause the cost at the pump to hold steady. But it’s unlikely that the 60 million barrels will make much of a difference.
In November, Biden and a few nations took 50 million barrels out of their reserves to help ease the gas shortage we were experiencing at the time. But the extra oil only gave drivers a short reprieve.