The West is tapping more of its emergency oil reserves to help wean itself off Russian crude.
The International Energy Agency announced Wednesday it would supply the oil market with 60 million additional barrels of crude from its emergency stockpiles. The Paris-based IEA, which monitors energy supplies for the world’s leading developed economies, said details would be forthcoming.
The news was enough to send oil prices down more than 5%. US oil tumbled to $96 a barrel, and Brent crude, the global benchmark, fell to $101 a barrel.
The 60 million barrels will come on top of the record 180 million barrels of oil President Joe Biden announced Thursday that the United States would release from its Strategic Petroleum Reserve. The United States plans to release 1 million SPR barrels a day over the course of the next six months. It’s unclear if the IEA’s plan will coincide with that time frame.
Still, it will take time for that added supply to come to market, and the contributing countries will need to find buyers for their oil. Over the course of the next six months, the release of 240 million barrels of reserved oil would result in an average of roughly 1.3 million barrels per day.
The IEA said Russia could be forced to cut its production by 3 million barrels per day, starting this month, as it struggles to find buyers after the country invaded Ukraine. If that happens, the emergency oil release would make up about 43% of that lost production.
Russia supplies about 40% of the European Union’s imports of natural gas, and about 27% and 46% of its imported oil and coal respectively.
The United States and United Kingdom have already banned Russian oil imports, and a wider de facto embargo has taken hold as banks, traders, shippers and insurance companies try to avoid falling afoul of financial sanctions. Earlier this month, EU leaders said the bloc couldn’t yet join the United States in banning Russian oil because of the impact that would have on households and industries already grappling with record high prices. Instead, they said they would work toward a deadline of 2027 for ending the bloc’s dependence on Russian energy.
The IEA first announced Friday that it would release additional oil from its emergency reserves, but it didn’t say how much it would add to the market. The latest steps mark just the fifth time in the agency’s history that it has coordinated a release of emergency stockpiles.
In a statement Friday, the IEA said energy ministers from its 31 member countries “reiterate their concerns about the energy security impacts of the egregious actions by Russia and voiced support for sanctions imposed by the international community in response.”
IEA members include the United States, the United Kingdom, Japan and Australia.
“The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock,” the IEA said in the statement, noting that Russia is currently the world’s third-largest oil producer and the largest exporter.
Tuesday’s announcement comes on the heels of a historically large release from the IEA. In early March, the IEA announced the coordinated release of 60 million barrels from emergency reserves of member nations, including 30 million from the US Strategic Petroleum Reserve.
US Presidential Coordinator for Global Energy Security Amos Hochstein told CNN earlier Wednesday that the United States and Europe are working “around the clock” to make sure pressure continues to build on Vladimir Putin, but that all costs can’t be mitigated.
“President Biden has been very clear that when you’re in a war like this initiated by Putin and Russia, there are going to be costs. We can’t mitigate all the costs, but what we’re doing is working together as an international community to do as much as we can to mitigate,” he told CNN’s Becky Anderson in an interview.
Hochstein highlighted the unity between the US and Europe in the response to Russia’s invasion of Ukraine. But he said both sides don’t need to enact the same sanctions package, because of “different circumstances” — alluding to Europe’s heavy reliance on Russian gas.
– CNN Business’ Mark Thompson, Matt Egan, Zeena Saifi and Chris Liakos contributed to this report.