Western nations, allies to release oil from reserves

Western nations and their allies agreed to release Petroleum from its reserves, joining the US. In their attempt to control the prices of Petroleum which were fired after Russia’s invasion of Ukraine.

The International Energy Agency, whose members include the US, most of Europe, Canada, Mexico, Japan and South Korea, said it would announce the amount of the release early next week. The OH said its members have 1.5 billion barrels of Petroleum in reserve.

The move is intended to further cushion the West as it moves to stop importing Petroleum Russia, the world’s second largest exporter of Petroleum raw after Saudi Arabia and the third largest producer. The Biden administration on Thursday ordered the release of 180 million barrels of Petroleum of US reserves for six months, the largest ever planned drawdown of the nation’s emergency power reserves.

The US, Europe and their allies seek to replace the Petroleum Russian with supplies from other sources, mainly in the US and the Persian Gulf. But the Biden administration says that the producers of Petroleum Americans will take months to ramp up production. President Biden on Thursday urged oil companies to invest more quickly in new production using the big profits they have made in recent months due to high prices. Meanwhile, the Organization of Exporting Countries of Petroleum it has rebuffed repeated pleas from Western officials to boost production.

The prices of Petroleum they have nearly doubled over the past year as energy markets have struggled to meet strong demand from economies that reopened after Covid-19 lockdowns. Prices rose further as Russia massed troops along the Ukrainian border and soared after the February 24 invasion, reaching their highest level since 2008.

The spike has sent gas prices in the US and parts of Europe to record highs.

The Russian invasion of Ukraine and Western sanctions against Moscow in response have triggered what the OH described as the biggest supply crisis in decades.

On March 1, the nations of the OH they tried to lower prices by announcing the release of 60 million barrels of their reserves on the market. Instead, prices rose over the following week as traders feared that the escalation of the war in Ukraine would continue. Last year, Russia exported 4.7 million barrels of raw per day, according to OH.

While the release of oil from stockpiles should push prices down in the short term, analysts are skeptical that the releases could have a lasting effect. The move could even push up prices at a later date when Western nations buy oil to replenish depleted emergency reserves, analysts say.

“We do not see this as a long-term solution to the global energy crisis and it will not fix structural imbalances in the oil market,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note to clients. .

Russia has had trouble finding buyers for its shipments of raw. Western banks, shipping companies and oil traders have shunned Russian oil, fearful of reputational risks. The United States has banned Russian oil imports entirely, while the UK has said it would phase them out. India, however, has stepped in to buy large quantities of raw Russian at a discount, analysts say.

The decision to tap the oil reserves came after Western governments failed to persuade nations of the OPEC to increase production, analysts said. On Thursday, the OPECRussia and Russia’s allied nations, a group called OPEC+, have signed on to a Moscow-backed production plan that will add a modest 432,000 barrels a day to the market, rejecting calls from oil-consuming countries to do more.

“It’s a reflection of the fact that the initial diplomatic outreach has failed,” said Joel Hancock, principal energy analyst at Natixis.

Both Saudi Arabia and the United Arab Emirates have considerable spare oil capacity, but as members of the OPEC they are bound by the cartel’s collective production agreements. The two Gulf states have been unwilling to increase the offer at the risk of angering their Russian ally in the OPEC+.

News taken from: The Wall Street Journal/ Free translation from English by world energy trade

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