IEA agrees 60 mil barrel oil stock release as Ukraine crisis fuels price jump

The International Energy Agency has agreed to release a total of 60 million barrels of oil in a coordinated effort in response to Russia's invasion of Ukraine, the agency said March 1.

Following an extraordinary meeting with its 31 member countries on March 1, the IEA said that the decision to release emergency oil stocks was "to send a unified and strong message to global oil markets that there will be no shortfall as a result of Russia's invasion of Ukraine."

"Russia's invasion comes against a backdrop of already tight global oil markets, heightened price volatility, commercial inventories that are at their lowest level since 2014, and a limited ability of producers to provide additional supply in the short term," the IEA said in a statement "Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery."

The IEA said an "initial" release of 60 million barrels is equivalent to 2 million b/d for 30 days or 4% of the IEA members' current oil stockpiles.

IEA members held close to 4.16 billion barrels in total oil stocks as of the end of 2021, including 1.5 billion barrels held by governments as emergency reserves. The group of the world's top oil-consuming countries requires members to hold 90 days of net imports in government or commercial storage.

The IEA will decide such details as the timing of the total 60 million barrels oil release as well as its allocation by each country in a speedy manner, an official at Japan's Ministry of Economy, Trade and Industry said.

The IEA meeting, chaired by US Energy Secretary Jennifer Granholm, comes a week after the IEA said its member countries "stand ready to act collectively to ensure that global oil markets are adequately supplied" as the escalating Russia-Ukraine standoff pushed oil prices above $90/b.

After Russia's full invasion of Ukraine last week, ICE Brent futures surged above $105/b Feb. 24 for the first time since 2014. The May ICE futures contract was trading around $104/b at 1545 GMT March 1.

The last time the IEA helped coordinate a release of strategic oil stocks was in response to the prolonged disruption of oil supply caused by the Libyan Civil War in 2011. Before then the IEA had coordinated only two other stock releases since its creation: in the build-up to the Gulf War in 1991 and after hurricanes Katrina and Rita damaged offshore oil rigs, pipelines, and refineries in the Gulf of Mexico in 2005.