NEW DELHI: Member countries of the International Energy Agency (IEA), including India, late on Tuesday agreed to release 60 million barrels of oil from their emergency stockpiles as a message to the global oil markets that there will be no shortfall in supplies as a result of the conflict between Ukraine and Russia.
The decision was taken at a ministerial level extraordinary meeting of the 31-member governing board chaired by US energy secretary Jennifer Granholm in her capacity as chair of this year’s IEA Ministerial Meeting.
IEA members hold emergency reserves of 1.5 billion barrels. The 60 million barrels amounts to 4% of those stockpiles. This is equivalent to 2 million barrels a day for 30 days against a daily global supply of approximately 100 million barrels before the pandemic.
The coordinated drawdown is the fourth in the history of the IEA, which was created in 1974. Previous collective actions were taken in 2011, 2005 and 1991.
India has a daily consumption of 4.5 million barrels per day of crude and has a stockpile of 39 million barrels, or roughly 8-9 days supply, spread across three locations.
India had in November agreed to release 5 million barrels from its stockpile as part of a US-led initiative for co-ordinated release by major oil consumers such as China, Japan and South Korea to cool prices as oil prices breached the $80 per barrel mark. This was the first time that India had tapped its emergency reserves for market intervention.
India, which meets 85% of its oil needs through imports, had on Saturday pledged support to another US bid for co-ordinated release of strategic reserves to calm the market as prices touched $105 per barrel, the highest since 2014, to raise fears of fuel price shock and hurting economic revival.
The statement came in the wake of US president Joe Biden saying he would do everything in his power to “limit the pain the American people are feeling at the gas pump”.
In a sign that widespread sanctions are unlikely against Russia’s energy supplies, the IEA meeting agreed that energy supply should not be used as a means of political coercion nor as a threat to national and international security.
The IEA Secretariat will continue to closely monitor global oil and gas markets and to provide recommendations to the Governing Board, including possible additional emergency oil stock draws, the IEA said in a statement.
The Russia-Ukraine conflict coincides with a tight global oil market, 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 situation in energy markets is very serious and demands our full attention. Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery,” the IEA statement quoted IEA executive director Fatih Birol as saying.
Russia 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 2.8 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.