IEA issuing emergency stock to cushion oil price shocks

The IEA said in a statement that the decision has been taken to send a unified and strong message to global oil markets that there will be no shortage of supplies as a result of Russia’s invasion of Ukraine.

The move will come as a major relief to countries heavily dependent on imports to meet their energy needs, including India. India, the world’s third largest oil importer, is dependent on imports to meet 85% of its oil needs and 55% of its natural gas requirements.

India is included in the IEA’s eight partner countries along with China, Brazil and South Africa.

On Thursday, the IEA Secretariat will release a 10-point plan on how European countries can reduce their reliance on Russian gas supplies by next winter.

Tuesday’s Extraordinary Governing Board meeting, held at the ministerial level, was chaired by US Secretary of Energy Jennifer Granholm.

“During today’s meeting, the ministers expressed solidarity with the people of Ukraine and their democratically elected government in protesting against Russia’s appalling and unprovoked violation of Ukraine’s sovereignty and territorial integrity,” the statement said.

The 31 member countries of the IEA include the US, UK, Canada, Australia and Japan.

IEA ministers expressed concern over the energy security implications of Russia’s actions and voiced support for sanctions imposed by the West. They observed the Russian offensive against the backdrop of already tight global oil markets, increased price volatility, commercial inventories that are at their lowest level since 2014, and limited ability of producers to provide additional supplies in the short term. Comes.

“It is heartening to see how quickly the global community has come together to condemn Russia’s actions and respond decisively,” said IEA Executive Director Fatih Birol.

“I am also pleased that our member states are committed to doing everything possible to support Ukraine in terms of fuel supply. At the invitation of the Governing Board, I will be specializing in our upcoming ministerial meeting later this month. I look forward to welcoming Ukraine’s Energy Minister Galushchenko as a guest,” said the Executive Director.

IEA members have emergency reserves of 1.5 billion barrels. An initial release announcement of 60 million barrels, or 4% of those stockpiles, equates to 2 million barrels a day for 30 days.

The coordinated fall is the fourth in the history of the IEA, created in 1974. The last collective action was taken in 2011, 2005 and 1991.

Russia plays a major role in global energy markets as it is the world’s third largest oil producer and largest exporter. Its exports of about 5 million barrels per day crude oil account for about 12% of global trade. The IEA said about 60% of Russia’s oil exports go to Europe and another 20% to China. During Tuesday’s meeting, ministers resolved that energy supplies should not be used as an instrument of political coercion or as a threat to national and international security.

The IEA Secretariat will continue to closely monitor global oil and gas markets and provide recommendations to the governing board, including additional emergency oil stock draws, as needed, the statement said.