IEA's extra oil release would come only after implementing existing obligations: Sadamori

The International Energy Agency's extra oil release would come only after the implementation of existing obligations, Keisuke Sadamori, the IEA's former director of energy markets and security, told Platts, part of S&P Global Energy, Oct. 8.

"In order for the additional releases, they have to implement the existing obligations first," said Sadamori, who retired from the IEA on June 30, on the sidelines of the 13th Annual Meeting of the Innovation for Cool Earth Forum in Tokyo.

"The existing release, they have to implement that first before doing anything more," said Sadamori, who is currently research director at the Canon Institute for Global Studies.

His comments come after the G7 set a four-month deadline for its member states to release the last 100 million barrels of oil stocks they committed to in March after collectively pledging to refrain from energy export restrictions within the organization.

The IEA, which counts all the G7 nations among its 32 member states, committed to releasing 400 million barrels of oil to the market in March, but has so far only recorded 300 million barrels of deliveries, according to data published in August. Of the supplies released to the market, 110 million barrels came from the Americas, 112 million barrels from Asia-Oceania and 68 million barrels from Europe, the IEA reported in August.

"So far, despite the massive scale of disruption of the Strait of Hormuz ... global oil markets somehow managed the situation," Sadamori said.

"This is thanks to a few factors. First, we had plenty of stocks before the crisis happened as the oil market was enjoying a very well-supplied market before the crisis," Sadamori said as he referred to "a massive surge" in exports from the Western Hemisphere, the US, Brazil and others outside the Persian Gulf region.

In addition to the IEA's oil release, Sadamori said China had reduced its oil imports "quite dramatically" since the start of the war in the Middle East.

On the G7's four-month deadline for the release of 100 million barrels of oil products, Sadamori said, "I think that the particular focus will be paid to the products like the diesel and jet fuels."

"When we look at the implementation of the stock release actions by the regions, the Asia Pacific has already implemented all of their stock release quotas. Indeed, they have exceeded the quotas because Japan released a lot more than agreed in the stock release actions agreed on March 11," Sadamori said.

"North America released about three-quarters, while in the case of Europe, they released just a little more than 60% of the agreed amount," he said. "So in that respect, I think it is really important for them to complete their stock release as agreed."

LNG outlook

Commenting on the winter LNG supply and demand outlook, Sadamori said, "The outlook is not so hard compared with the case of oil," citing newly commissioned supply capacity in North America, including Canada, despite Middle East supply disruptions being "quite substantial."

"But in the case of natural gas, for the power generation fuels, there are some countries that are switching to other sources like coal for the power generation. So that's also easing the tightness of the market," Sadamori said.

"Having said that, whether we can survive the winter would depend on various factors," including a mild winter in Europe.

The low filing of underground gas storage in Europe remains "a bit of a worrisome factor," Sadamori said.

EU-wide gas storage was 72.97% full as of Oct. 7, according to the latest data from Gas Infrastructure Europe.

"And I understand that they are going to discuss how they would handle the current policy to completely phase out Russian LNG imports," he said.

"So I think we need to see how European countries will discuss whether to postpone it or do it as agreed."

The EU is set to ban all imports of Russian LNG from Jan. 1, 2027, under legislation approved at the start of this year.

Some European companies with long-term Russian LNG contracts can continue to divert some shipments outside the EU until at least late July 2027 under a carve-out in the EU's latest sanctions package against Moscow, approved in July.

"We're not sure whether they will implement this Russian LNG phaseout or not," Sadamori said. "We need to see how they decide in the remaining months of this year... We'll see what European policymakers decide."