AP/Damian Dovarganes
- IEA chief Fatih Birol told an energy conference in Paris the agency will release more oil from stocks to ease surging fuel prices.
- His plan is a response to President Biden’s ban on imports of Russian oil and gas to the US.
- Crude oil fell by over 3% Wednesday in response to Birol’s statement. It is currently trading just over $120 a barrel.
Oil prices slipped by over 2% Wednesday after the International Energy Agency (IEA) said it will release additional stocks to ease rising fuel prices.
At 6:30 ET, the price of crude oil fell 3% to just above $120 a barrel after the agency announced that it will boost supply in response to the US’s ban on Russian oil and gas imports.
“Next week, as we did for gas, we are coming up with a 10-point action plan to reduce oil in a hurry,” the IEA’s executive director Fatih Birol told an energy conference in Paris. “If there is a need, we can bring more oil to the markets.”
IEA members agreed last week to release 60 million barrels of oil stockpiles in an attempt to halt price rises. Half of the release will come from the US Strategic Petroleum Reserve, with the rest coming from Europe and Asia.
Birol said that those proposed measures were “an initial response”, accounting for just 4% of the IEA’s total reserves. “If our governments decide so, we can bring more oil to the markets,” he added.
The IEA is moving to ease oil prices after President Joe Biden announced a ban on Russian energy imports on Tuesday. The US President warned that all Americans were likely to feel the impact of ‘Putin’s price hike’ at the gas pumps.
Oil prices are up 65% so far this year as western sanctions against Russia lead to fears of a supply shortfall.
Russia is the world’s third-largest oil producer and accounts for 11 million barrels per day or 10% of total global supply, according to the IEA.
Bank of America had previously warned that sanctions could drive the price of oil to $200 a barrel, noting that an import ban could lead to a shortfall of at least 5 million barrels per day.
Other analysts noted that prices will continue to rise if other western nations follow the US’s lead in sanctioning Russian energy. The UK has already announced plans to phase out all Russian oil products by the end of 2022.
“It feels like European public opinion is building towards completely cutting off the Russian energy supply,” Deutche Bank managing director Jim Reid said in a research note.
Russia, meanwhile, has warned oil prices could hit $300 a barrel if the US and Europe reject Russian oil.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Russian deputy prime minister Alexander Novak — who also oversees energy affairs — said on state television on Monday, according to a Reuters translation.
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