Western countries will dump 60 million more barrels of emergency oil on the market

The International Energy Agency announced on Wednesday that it would supply the oil market with an additional 60 million barrels of crude from its emergency reserves. The Paris-based IEA, which monitors energy supplies for the world’s major developed economies, said details would be released soon.

The news was enough for oil prices to fall 2.5%. US oil fell below $100 a barrel, and Brent crude, the global benchmark, fell to $104 a barrel.

The 60 million barrels will be added to the record 180 million barrels of oil President Joe Biden announced Thursday that the United States would release from its Strategic Petroleum Reserve. The United States plans to release 1 million SPR barrels per day over the course of the next six months. It is unclear whether the IEA’s plan will coincide with that time frame.

Still, it will take time for that extra supply to hit the market, and contributing countries will need to find buyers for their oil. Over the course of the next six months, the release of 240 million barrels of reserved oil would result in an average of about 1.3 million barrels per day.

The IEA said that Russia could be forced to cuts its production by 3 million barrels per day, starting this month, as it struggles to find buyers after the country invaded Ukraine. If that happens, the emergency oil release would account for about 43% of that lost production.

Russia supplies about 40% of the European Union’s natural gas imports and about 27% and 46% of its imported oil and coal, respectively.

The United States and the United Kingdom have already banned imports of Russian oil, and a wider de facto embargo it has taken hold as banks, merchants, carriers and insurance companies try to avoid financial penalties. Earlier this month, EU leaders said the bloc could not yet join the United States in banning Russian oil because of the impact it would have on households and industries already facing record prices. Instead, they said they would work towards a 2027 deadline for ending the bloc’s dependence on Russian energy.

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IEA first announced on friday that it would release additional oil from its emergency reserves, but did not say how much it would add to the market. The latest steps mark the fifth time in the agency’s history that it has coordinated an emergency stockpile release.

In a statement on Friday, the IEA said energy ministers from its 31 member countries “reiterate their concerns about the energy security impacts of Russia’s egregious actions and express support for sanctions imposed by the international community in response.” “.

IEA members include the United States, the United Kingdom, Japan, and Australia.

“The prospect of large-scale disruptions in Russian oil production threatens to create a global oil supply shock,” the IEA said in the statement, noting that Russia is currently the third largest oil producer and the world’s largest exporter. world.

Tuesday’s announcement comes on the heels of a historically large statement from the IEA. In early March, the IEA announced the coordinated launch of 60 million barrels of member countries’ emergency reserves, including $30 million from the US Strategic Petroleum Reserve.

US Presidential Coordinator for Global Energy Security Amos Hochstein told CNN on Wednesday that the United States and Europe are working “around the clock” to make sure the pressure on Vladimir Putin continues, but not can mitigate all costs.

“President Biden has made it very clear that when you are in a war like this started by Putin and Russia, there will be costs. We can’t mitigate all the costs, but what we’re doing is working together as an international community to do everything we can to mitigate,” he told CNN’s Becky Anderson in an interview.

Hochstein highlighted the unity between the United States and Europe in the response to the Russian invasion of Ukraine. But he said both sides do not need to enact the same sanctions package, due to “different circumstances,” alluding to Europe’s heavy reliance on Russian gas.

— Mark Thompson, Matt Egan, Zeena Saifi and Chris Liakos of CNN Business contributed to this report.

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