US and allies agree to release 60 million barrels of oil from reserves as Russian invasion of Ukraine causes price spike

Half of that total – 30 million barrels – will come from the US Strategic Petroleum Reserve, and the other half will come from allies in Europe and Asia. These other allies include Germany, the United Kingdom, Italy, the Netherlands and other major European countries, as well as Japan and South Korea.

The invasion of Ukraine has raised concerns about a supply disruption from Russia, the world’s second-largest oil producer. Brent oil prices closed above $100 a barrel on Monday for the first time since 2014. U.S. crude and Brent crude surged another 5% on Tuesday even as the International Energy Agency meets to discuss a response to the Russian-Ukrainian crisis.

High oil prices have pushed prices at the gas pump to seven-year highs. The national average for regular gasoline rose to $3.62 on Tuesday, up about 9 cents in a week and 24 cents in a month, according to AAA. At some point, energy prices could get so high that they erode consumer demand and slow down the economy as a whole.

U.S. officials have spent the past few weeks in calls and meetings with counterparts in major energy-supplying nations in an effort to secure commitments to address any market disruptions. The effort included an in-person visit to Saudi Arabia by two senior administration officials to discuss the need to address the effect on oil markets. The United States informed Saudi Arabia before the announcement of the oil reserve.
President Joe Biden signaled his intention to release oil last week.

“We are actively working with countries around the world to assess a collective release of strategic oil reserves from major energy-consuming countries. And the United States will release additional barrels of oil if conditions warrant,” he said. he declares.

The Paris-based International Energy Agency is holding a last-minute oil supply meeting on Tuesday in a bid to “stabilize markets”, it said earlier this week. The meeting will be chaired by US Secretary of Energy Jennifer Granholm.

Tapping the reserve – the 600 million barrel stockpile of crude oil stored in underground salt caverns in Louisiana and Texas – generally has only a limited effect on gas prices due to the amount of oil that can be released at once, but would act as a political sign that Biden is facing the issue.

Chevron CEO Mike Wirth on Tuesday voiced support for governments to release emergency stocks of oil to offset supply fears sparked by Russia’s invasion of Ukraine.

“I think a coordinated response from multiple countries could help in the short term,” Wirth said in response to a question from CNN during a briefing with reporters. “Certainly we have seen markets worrying about supply and reliability of supply.”

Wirth said he is confident there will be no major supply disruptions.

“I have seen nothing to indicate that Russia’s intentions or the intentions of the governments involved in the sanctions would be to restrict the supply of oil,” Wirth said. “In fact, it’s quite the opposite. It seems to me that people have been careful to signal their intent to try to maintain the energy supply for a world that needs it.”

This story has been updated with additional reports.

CNN’s Matt Egan contributed to this report.


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