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2 Mar, 2022 14:32

US and allies to tap oil reserves amid price spike

Over 30 countries announced the move as crude price surges due to the war in Ukraine
US and allies to tap oil reserves amid price spike

The US and 30 other member states of the International Energy Agency (IEA) on Tuesday agreed to jointly release 60 million barrels of oil from strategic reserves to keep prices from skyrocketing amid the ongoing conflict in Ukraine. The move was announced by the US Department of Energy and is only the fourth such major step in the IEA’s history.

About half of the planned release will come from the US oil reserves, while the shares of other IEA member countries in the release will be determined in the coming days, Japanese industry minister Koichi Hagiuda said, as cited by Reuters.

IEA Executive Director Fatih Birol called the current situation in energy markets “very serious” and demanded “our full attention.” He added that member states would tap reserves further if the need arises.

The move comes as many western states impose sanctions on Russia, one of the globe’s major oil suppliers, amid Moscow’s military operation in Ukraine. Penalties currently do not target Russia’s oil exports, but industry players fear this may change.

Additionally, a number of global energy firms announced they would be cutting ties with Russia, including BP, Shell, Total and Exxon Mobil, which also adds pressure to a market which is already in disarray.

The announcement failed to calm the global oil markets. The price of Brent crude May futures on the London ICE exchange topped $113.02 per barrel around 08:00 GMT on Wednesday, growing by 7.67%. The last time Brent exceeded $113 per barrel was in June 2014. US benchmark West Texas Intermediate (WTI) soared by 6.6% to $110.25 per barrel.

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