IEA Member Countries to Release 60 Million Barrels From Strategic Oil Reserves to Stabilize Market

The U.S. and the 30 other member countries of the International Energy Agency have agreed to release 60 million barrels of oil from strategic reserves on Mar. 1 to ensure continuity of crude supplies amid Russia’s invasion of Ukraine. This is only the fourth time the IEA has undertaken a coordinated drawdown since it was founded in 1974. The agency holds emergency stocks of 1.5 billion barrels. The initial release, equivalent to 4 percent of those stockpiles, is equivalent to 2 million barrels a day for 30 days. The decision comes as the conflict in Ukraine has resulted in market and supply disruptions, causing oil prices to soar.

The U.S. will contribute half the drawdown as President Biden makes an initial commitment of 30 million barrels of oil to be released from the Strategic Petroleum Reserve (SPR). The Energy Department’s move to release oil from the SPR marks the second such move under the Biden administration. President Biden in November 2021 announced the sale and exchange of 50 million barrels—the largest such draw-down on record—to try and tamp down U.S. gasoline prices.

Russia has a big role in the global energy market. The country ranks third in oil production and is the largest exporter. Russia’s export of crude oil – about 5 million barrels a day – accounts for roughly 12 percent of global trade, while petroleum products – about 2.85 million barrels a day – account for around 15 percent. Russian oil exports go to Europe and China, respectively, to the tune of about 60 percent and 20 percent, respectively.

The U.S. Energy Department is managing the sale, which will sell crude from all four storage facilities that make up the SPR. The US will offer 2 million barrels of sour crude from its Big Hill SPR site near Beaumont, Texas, 10 million barrels of sour crude from its West Hackberry SPR site near Lake Charles, Louisiana, and up to 8 million barrels bl of sour crude from its Bryan Mound SPR site near Freeport, Texas. The sale will also offer up to 10 million barrels of sweet crude from the Bayou Choctaw SPR site in Louisiana.