On Tuesday, the International Energy Agency (IEA) released a statement saying that the United States as well as 30 other countries in the world including many in the EU had committed that they were going to release 60 million barrels of oil that had been kept in reserve by these countries. This would reduce the rates of gasoline, which have been rising in recent weeks.
The invasion of Ukraine by Russia has also caused a tight oil market around the world. Although Russia has faced multiple sanctions from several countries around the world, no direct sanctions have been placed on its oil and gas sector.
Faith Birol, who is an Executive Director at IEA, said that the situation in energy markets was very serious and demanded their full attention. The director also said that global energy security was “under threat” and this would put the world economy at risk, when it was at a “fragile state of recovery.”
The U.S. Energy Department said that it will be releasing 30 million barrels of oil from its stockpile called the Strategic Petroleum Reserve (SPR). The total reserves of oil in the U.S. SPR on February 22 stands at 582.4 million barrels.
This release will be a strong step to try and reduce energy costs for customers. On Tuesday, in a statement Jennifer Granholm, who is the energy secretary, said that the Biden administration could take “additional measures” if required.
The energy secretary also spoke of the nation’s belief in “investing in clean energy” as it would be the best way for the nation and the world to decrease its dependence of Russian oil and gas. According to the Department of Energy, the nation would also support “clean energy goals” and more.
Analysts in the oil industry are not sure of the effect on gas prices after the release of oil that has been stockpiled. They are unable to estimate the impact of oil prices as there is a lot of uncertainty around the invasion of Ukraine by Russia, about how long it would last and what would be its short term and longterm effects on oil prices, as time goes by.
Russia is the third largest producer of oil. An initial release of about 2 million barrels a day for 30 days would have an impact on prices on the short term. However, analysts think that oil reserves would not be able to replace Russian oil in the longterm.
