IEA confirms 'unprecedented' 120 million barrel stock release

The International Energy Agency confirmed April 7 member countries have agreed to release 120 million barrels of oil from storage, making it the largest stock release in IEA history.

This comes after the US pledged to tap 180 million barrels of oil last week, effectively releasing 1 million b/d for six months from May, in a bid to alleviate market concerns over potential shortages from a drop in Russian oil exports.

Oil prices have fallen since March 9, when the IEA announced its first release. NYMEX front-month was trading around $94.30/b midday April 7, down 93 cents on the day and down from $123.70/b on March 8.

"The commitments submitted by members reached 120 million barrels to be released over a six month period, demonstrating strong unity," the Paris-based agency said in a release. "The United States will contribute about 60 million barrels, which are part of the larger [180 million barrel] drawdown from its Strategic Petroleum Reserve (SPR) that was announced on 31 March," it added.

The IEA also clarified that over the next six months, around 240 million barrels of emergency oil stocks, the equivalent of well over 1 million b/d, will be made available to the global market.

That implies the total release would include the 62.7 million barrels announced by the IEA on March 9, 30 million barrels of which is coming from the US.

Supply concerns have gripped the market as sanctions and buyer aversion disrupts Russian oil supplies amid the Ukraine conflict. S&P Global Commodity Insights analysis assumes that Russian oil exports (crude oil, products, and feedstocks) will fall by roughly 2.8 b/d, from late April through December.

"Disruptions could exceed this level if conditions in Ukraine trigger explicit restrictions on oil exports to Europe, or even secondary US sanctions targeting shipments elsewhere. Recent comments from European and US officials indicate the odds of both will rise in the months ahead, with restrictions potentially phased in gradually," said Paul Sheldon, chief geopolitical adviser at S&P Global Commodity Insights.

"The unprecedented decision to launch two emergency oil stock releases just a month apart, and on a scale larger than anything before in the IEA's history, reflects the determination of member countries to protect the global economy from the social and economic impacts of an oil shock following Russia's aggression against Ukraine," said IEA Executive Director Fatih Birol.