IEA to release reserve oils to cool the oil price
The International Energy Agency has agreed to release 60 millions barrels of oil reserves in the world market to deal with the shortfall in the oil after the Russian invasion of Ukraine on 24 February 2022.
Importance of Russia in oil market
Russia is an important player in the world oil market.
It is the world’s third largest oil producer and the largest exporter.
Its exports of about 5 million barrels a day of crude oil represent roughly 12% of global trade – and its approximately 2.85 million barrels a day of petroleum products represent around 15% of global refined product trade.
Around 60% of Russia’s oil exports go to Europe and another 20% to China.
Source of Data (International Energy Agency )
Though the Western countries led by the United States have not yet imposed sanctions on the Russian oil industry, the buyers are avoiding Russian oils. The uncertainty of supply of oil has led to a sharp rise in the price of oil and it has crossed $100 per barrel . The continuous rise in oil prices has led to fear of high inflation around the world and it threatens the world economic recovery after the corona pandemic .
IEA members hold emergency stockpiles of 1.5 billion barrels. The proposed initial release of 60 million barrels, or 4% of those stockpiles, is equivalent to 2 million barrels a day for 30 days.
This is the fourth coordinated attempt by the IEA to release oil from the reserves . It released oil from reserves in 1991, 2005 and in 2011.
Half of the planned release will come from the United States. The United States maintains half the worlds’ oil strategic reserves .The other 30 IEA members are required to hold oil in emergency reserves equivalent to 90 days of net oil imports
Japan has one of the largest oil reserves after China and the United States.
However many experts believe that it will not be able to cool the price of oil in the market .
International Energy Agency
It was set up by the developed countries in 1974 after the 1973 oil crisis .
It was initially set up to protect oil supplies .Now its field has been expanded to include issues like electricity security to investments, climate change, air pollution, energy access and efficiency, etc.
Total Member 31 countries . All are developed countries .(from Asia only Japan and South Korea are its member )
India, China are not members of the IEA . They are an associate state of the IEA .
Headquarters of IEA : Paris, France
Important reports released by EIA :
World Energy Report
Global Energy Review
Oil Market Report
Important for EXAM
One barrel of Oil is equivalent to: 158.987 liters of oil
: 42 gallons (US)
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