The US has agreed with its allies, the member countries of the International Energy Agency (IEA), to pump 60 million barrels of crude oil from their reserves into the market, the White House announced on March 1st.
Accordingly, US President Joe Biden will authorize the US Department of Energy to provide 30 million barrels of the American strategic reserves. Moreover, the IEA Member countries agreed to monitor energy markets and to study further crude oil releases as necessary.
“We are prepared to use every tool available to us to limit disruption to global energy supply as a result of President Putin’s actions. We will also continue our efforts to accelerate diversification of energy supplies away from Russia and to secure the world from Moscow’s weaponization of oil and gas,” the White House said.
This comes as the US and its allies attempt to control the oil price fluctuations ignited by the Russia-Ukraine conflict, which has stoked fears of an oil shortage if sanctions are imposed on Russian oil. On February 24th, Russia launched a full-scale invasion of Ukraine, causing oil prices to skyrocket.
As of now, the agreed releases have not had an immediate impact on price hikes as West Texas Intermediate (WTI) futures in New York exceeded $106 a barrel, compared to $103.41 per barrel on March 1st. Moreover, Brent crude oil prices have soared higher than $110 a barrel today, compared to $107.67 high, and $98.3 a barrel low yesterday, and $95.73 a barrel, which was the highest price on February 23rd, before the invasion.
Several companies, including ExxonMobil, TotalEnergies and bp are exiting Russia, which could affect the Russian oil supply. However, no sanctions were imposed on importing oil from Russia. Meanwhile, the company building the Nord Stream 2 natural gas pipeline, connecting Russia and Germany, announced insolvency.
In the meantime, the Organization of the Petroleum Exporting Countries (OPEC) stated its commitment to the OPEC + agreement with Russia to curb production, despite the instability in oil prices. The US has been urging the OPEC+ countries to boost production faster than planned. However, Saudi Arabia is resisting US calls to increase output more than the agreed upon amounts under the OPEC+ agreement.
This comes as Russian President Vladimir Putin spoke to Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan over the phone on March 1st. The two leaders discussed the OPEC+ oil agreement and pledged to coordinate on global energy markets, according to Reuters. Accordingly, OPEC+ leaders are planning to have a virtual meeting today in order to review the group’s further oil output policy.
As the situation slowly unfolds, the world is closely watching to find out whether Russia’s oil supply will become a target of sanctions or not, and what will become of the global market if this were to happen. Even with the drastic measures taken by the US and IEA to stabilize oil prices, the question arises: would these measures successfully control prices or would the prices continue fluctuating?