The International Energy Agency (IEA) has put forward a proposal to cut its largest oil reserves to deal with rising crude prices amid tensions between the US, Israel and Iran, according to a report by The Wall Street Journal.
The projected output would exceed the 182 million barrels of oil (mbbl) released by IEA member countries in 2022 when Russia invaded Ukraine.
IEA members have called an emergency meeting to consider the proposal, with a decision expected on Wednesday.
However, opposition from even one member state could delay the process.
IEA member countries hold more than 1.2 billion barrels (bbl) of public emergency oil reserves, and an additional 600mbbl of government-mandated industrial stocks.
Meanwhile, G7 energy ministers refused to approve the release of oil reserves and instead called for an IEA assessment, it was reported. Reuters.
A G7 source was quoted by the news agency as saying: “Although no country is currently facing a shortage of raw materials, prices are rising sharply, and leaving the situation unattended is not an option.”
The source added that the G7 countries generally supported the action coordinated by the IEA but noted that further discussions were needed on the volume, country allocation and timing before the release could begin.
The IEA secretary is expected to propose conditions based on market implications and may engage with non-members such as China and India.
At 04:51 GMT on Wednesday, oil prices continued to fall 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 report.
This market reaction follows sharp percentage declines in both contracts from 2022, driven by concerns that the conflict could disrupt supply.
G7 officials have met online to deliberate on the possible release of emergency oil reserves to cushion the effects of the market.
French President Emmanuel Macron is scheduled to hold a video conference with other G7 leaders on Wednesday to address energy issues stemming from tensions in the Middle East.
Meanwhile, Abu Dhabi’s regional oil company, ADNOC, has shut down the Ruwais refinery due to a fire caused by a drone strike at one of its units. This marks another disruption of electricity infrastructure in recent days due to the ongoing conflict.
Amid this global upheaval, Brazil remains a “relative winner” in a climate of high oil prices, according to a GlobalData TS Lombard report written by Elizabeth Johnson and Wilson Ferrarezi.
As of 2024, crude oil has become the country’s top export, and the current price increase is expected to significantly increase export revenue and financial profits for state-owned Petrobras.
Despite global supply concerns cited by the G7, Brazil’s long-term investment in oil and gas has ensured independence since 2006, positioning it to be one of the world’s five largest exporters by 2030.
“IEA proposes oil storage cuts amid Middle East turmoil” was originally created and published by Offshore Technology, a GlobalData-owned brand.
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