IEA proposes record oil release in response to Iran war
|
The International Energy Agency has recommended the release of 400 million barrels of oil, the largest such move in its history, to try to restrain soaring crude prices amid the US-Israeli war with Iran.
The IEA said the release had been unanimously agreed by 32 member countries, with timing to be set out in due course.
The Paris-based IEA made its comments as French President Emmanuel Macron chaired a meeting of G7 leaders that will discuss the issue.
Germany’s Economy Minister Katherina Reiche had earlier confirmed reports of the 400-million-barrel figure and said her country would participate in the release.
The US and Japan would be the largest contributors to the IEA release, she added.
“Pressure came mainly from the US government which wants this release,” a European Union diplomat said, speaking before the IEA statement.
US Interior Secretary Doug Burgum welcomed reports of the planned release.
“This is the perfect time to think about releasing some of those to take some pressure off of the global price,” he said in an interview with Fox News.
Burgum said, however, he did not believe the world was facing an energy shortage.
“We’ve got a transit problem, which is temporary,” he said.
“You have a temporary transit problem that we’re resolving militarily and diplomatically, which we can resolve and will resolve.”
The IEA’s suggestion that it will make 400 million barrels of oil available from its members’ emergency reserves is a larger stock than the 182.7 million barrels that were released in 2022 by the organisation’s 32 member countries in response to Russia’s full-scale invasion of Ukraine.
“Without sufficient routes to market and with no more available storage, Middle East oil producers have started to reduce production,” IEA executive director Fatih Birol said on Wednesday.
“And we have seen further attacks and damage to energy and energy-related infrastructure. Refinery operations have also been disrupted, with major implications for jet fuel and diesel supplies in particular.”
IEA member countries currently hold more than 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.
Analysts have said the pace of daily IEA stock releases would matter as much as if not more than the overall size.
If 100 million barrels were released over the next month, the daily pace will amount to about 3.3 million barrels per day – a fraction of the current disruption of about 20 million barrels per day, with the Strait of Hormuz between Iran and Oman effectively blocked.
Oil prices rebounded on Wednesday as markets doubted whether the IEA’s plan could offset potential supply shocks from the conflict.
with AP
Reuters