Members of the International Energy Agency (IEA) are holding an extraordinary ministerial meeting on Tuesday which could lead to a coordinated oil stocks release as Russia’s invasion of Ukraine sent oil prices soaring above $100 a barrel.
Crude oil was trading around $103 a barrel on Tuesday as some buyers shunned Russian barrels after Western allies imposed sanctions on Moscow, while supplies worldwide have tightened as economic demand has soared, with output struggling to keep up.
A disruption from Russia, one of the world’s top oil producers which exports around 4-5 million barrels per day (bpd) of crude, could send prices even higher.
The meeting began at 1300 GMT and was due to end at 1500 GMT, Japan’s industry ministry said.
U.S. Energy Secretary Jennifer Granholm is chairing the meeting of member countries in the Paris-based IEA, which represents mostly industrialised nations and has coordinated three emergency oil stock releases in the past.
“The rise in oil prices causes concern across the world and this has created a discussion about whether a coordinated release by IEA members of part of the existing strategic reserve would be necessary to stabilise the market,” European Union energy policy chief Kadri Simson said on Monday.
“Releasing part of these stocks is a powerful tool that member states can use, but the right conditions have to be in place,” Simson added after a meeting of energy ministers from EU countries, many of which are also IEA members.
The 30-member IEA was founded in 1974 as an energy watchdog, and defines one of its main roles as helping “coordinate a collective response to major disruptions in the supply of oil”.
Last November, The United States announced a release of 50 million barrels from the U.S. Strategic Petroleum Reserve, a move made in concert with oil consuming nations including China, India and Japan.
The IEA did not oversee that operation, saying at the time it only responds collectively to major supply disruptions. It last coordinated a release amid the oil supply disruption wrought by the Libyan Civil War in 2011.
China, the world’s No.2 consumer and largest importer, never officially committed to that move and has been buying more for its reserves instead.
The United States is responsible for about half of the world’s strategic petroleum reserves and the other 29 IEA members – including the United Kingdom, Germany, Japan and Australia – are required to hold oil in emergency reserves equivalent to 90 days of net oil imports.
Japan has one of the largest reserves after China and the United States.
The IEA said last month that commercial oil stocks in OECD countries were at the lowest level in more than seven years and covered just under 60 days of forward demand in December.