The International Energy Agency (IEA) has proposed the largest release of oil reserves in its history to combat rising oil prices amid tensions between the US, Israel and Iran. The Wall Street Journal.
The proposed release would exceed the 182 million barrels of oil released by IEA member states in 2022 during Russia’s attack on Ukraine.
IEA members called for an emergency meeting to consider the proposal, with a decision expected on Wednesday.
However, the objection of even one member state can delay the initiative.
IEA member countries have more than 1.2 billion barrels (bbbl) of public emergency oil reserves and an additional 600mbbl of industry reserves designated by governments.
Meanwhile, G7 energy ministers refused to release strategic oil reserves and instead asked the IEA for an assessment. Reuters.
“Although no country is currently facing a physical shortage of oil, prices are rising rapidly, and ignoring the situation is not an option,” the news agency quoted a G7 source as saying.
The source added that G7 countries generally support the action coordinated by the IEA but noted that further discussions are needed on volume, country allocation and timing before release.
The IEA Secretariat is expected to propose scenarios based on market impacts and may engage with non-members such as China and India.
By 04:51 GMT on Wednesday, oil prices continued to decline as Brent futures fell $0.88 to $86.92 per barrel (bbl), while US West Texas Intermediate fell $0.35 to $83.1/bbl. Reuters Reported.
The market reactions followed the lowest percentage decline in both contracts since 2022, amid concerns that the conflict could disrupt supply.
G7 officials have met online to discuss a possible release from emergency oil reserves to cushion the market impact.
French President Emmanuel Macron will hold a video conference with G7 partners on Wednesday to address energy issues stemming from tensions in the Middle East.
Meanwhile, Abu Dhabi’s state-owned oil company ADNOC shut down its Roos refinery in response to a fire at one of its units caused by a drone strike. This is yet another disruption in energy infrastructure due to the ongoing conflict in recent days.
Amid this global volatility, Brazil remains a “relative winner” in a climate of high oil prices, according to a Global Data TS Lombard report written by Elizabeth Johnson and Wilson Ferrezi.
As of 2024, crude oil has become the country’s top export, and the current price increase is expected to significantly boost export revenues and financial income for state-owned Petrobras.
