The United States and other world powers have agreed to release 60 million barrels of oil from their reserves, a move intended to reduce gasoline prices that have climbed rapidly in recent weeks, according to the International Energy Agency.
The energy agency’s governing board released a statement Tuesday attributing the decision to tight global oil markets that have become further strained by Russia’s invasion of Ukraine. Although the sanctions that countries have imposed on Russia in recent days do not directly target its oil and gas sectors, continued fighting is expected to disrupt supply routes through Ukraine and the Black Sea, shrinking crude oil stocks dramatically.
With oil prices climbing to well over $100 a barrel — and some industry analysts predicting they could hit $130 — the energy agency said its intent is 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 release is only the fourth time the international organization has overseen a coordinated drawdown of reserves since it was created in 1974. In its announcement, the IEA said its initial release is equivalent to 2 million barrels a day for 30 days.
“I am pleased that the IEA has also come together today to take action. The situation in energy markets is very serious and demands our full attention,” said IEA Executive Director Fatih Birol. “Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery.”
The U.S. Energy Department plans to release 30 million barrels of oil from the Strategic Petroleum Reserve, one of the most aggressive steps available to the White House as it tries to reduce costs for consumers. In separate statements issued Tuesday, Energy Secretary Jennifer Granholm and White House press secretary Jen Psaki suggested that the Biden administration may release more.
The U.S. is “prepared to use every tool available to us to limit disruption to global energy supply as a result of President Putin’s actions,” Psaki said. “We will also continue our efforts to accelerate diversification of energy supplies away from Russia and to secure the world from Moscow’s weaponization of oil and gas.”
The release makes up a small percentage of the nation’s total reserves, which held 582.4 million barrels as of Feb. 22. It marks the second time the Biden administration has tapped the reserve in coordination with other countries. The Energy Department released 50 million barrels of oil from the reserve last November in an effort to reduce global prices.
Oil industry analysts said it’s unclear exactly what effect the release of stockpiled oil will have on prices. Uncertainty over how long the war in Ukraine will last and what effect it will have on Russian oil exports has made it difficult for experts to predict how much worse the oil shortage could become in the weeks and months ahead.
Russia is the world’s third-largest oil producer. It exports more oil than any other country — about 5 million barrels a day of crude — and accounts for roughly 12 percent of global trade.
Replacing Russia’s oil exports in the long term using emergency reserves is not an option, industry analysts said. But as a short-term response to inflationary pressure and rising gasoline prices, it is expected to make up for supply shortages and either lower prices or prevent them from surging.
Drivers and Americans who depend on oil to heat their homes probably won’t feel the impact of the countries’ decision for several weeks. It takes time for refineries to convert crude oil into gasoline, diesel fuel and other petroleum products and more time for those fuels to reach consumers. In the meantime, experts said, it’s likely that the average price of gasoline in the U.S. will continue to climb.